While we have been stuck in a bit of a rut lately when it comes implied volatility in the broad market indices, there have still been plenty of opportunities to be had either in this particularmarket or elsewhere in single stocks. Today, the guys rap about attempting to play the extreme in IV by using either options on the S&P 500 (SPY) or direction in the S&P 500 IV Index (VIX).
Tom and Tony go through the pros and cons of buying options in an attempt to get long IV in a complacent market and go on to compare the strategy toin the VIX to the same end.
A small study shows that buying options,, was not a successful strategy when IV was low. However, trying to play direction in the VIX did see some success at depressed levels.
Check out the comparison of these two long IV strategies above.