Tariff Announcement Sends VIX Above 27%

Why selling high implied volatility could make a lot of sense now

A new day in the markets with a spike in the VIX index, also referred to as the fear gauge. Yesterday’s tariff announcement spooked investors, but somehow, market watchers expected a bigger spike in volatility, and therefore believe it’s too orderly for this to be total panic selling.

Even gold is down 2% today, despite severe weakness for the US dollar (which usually benefits gold), which could indicate some highly levered parties are forced to liquidate parts of their defensive portfolio to compensate for steep losses on aggressive positions.

Right now (pre-market), the portfolio (in USD) is up 2.59% since we started the Substack on December 17, which is a new all-time high but we don’t think it’ll hold for long. Nonetheless, what we don’t lose vs. the indexes should be viewed as pure profit. We still have excess cash we’re looking to deploy today, because: when fear’s high (>25% VIX), there are good opportunities to sell options premium.

Now, as we’ve said multiple times before, no one has a crystal ball, and it’s perfectly possible for volatility to expand even more. Given that we’re not involved in naked positions, we can sit tight and let the market do its thing.

Let’s take a look at what we’ll be doing next.