re: Options Trading Thread

The VIX is up about 7% today, finally back above 16. I don’t trade or even rely on the VIX by itself to make trades. It’s just one factor. But since I’m a premium seller and I only trade SPX options in my business account, the level or range of the VIX gives me a reference point for how much risk or account allocation I should go with.

Since Tom Sosnoff has done some extensive work in this area (and has a great deal of experience in the option selling world), I use his guidepost as general reference:

VIX is greater than 40
50% max account allocation

VIX is between 30 and 40
40% max account allocation

VIX is between 20 and 30
35% max account allocation

VIX is between 15 and 20
30% max account allocation

VIX is between 10 and 15
25% max account allocation