Options Playbook Ep. 459 — Exploring #VIX, #COP And #CSCO
This episode of Options Guy TV opens with a well-earned victory lap on ConocoPhillips, a position Brian Overby had nursed through several rounds of adjustment, starting as a diagonal, rolling into a vertical call spread, and finally adding a short put spread against the position after a temporary sell-off tied to Strait of Hormuz headlines. With the stock having rallied back to touch the 125 level Brian had originally targeted, he’s candid about how satisfying this particular trade felt precisely because of how much active management it required, noting there was never a point where the position was down badly enough to simply give up on the underlying thesis. It’s a genuinely useful case study in staying with a name through multiple rounds of adjustment rather than abandoning a thesis at the first sign of trouble.
Cisco gets a shorter check-in, with Brian noting the butterfly from the prior episode is trading roughly flat heading into that evening’s earnings report, still offering solid risk-reward given its modest dollar cost. He uses the moment to reinforce a point about butterfly economics that recurs throughout his shows, that because the trade only risks a dollar with a clearly defined maximum gain, there’s little reason to exit early just because the position hasn’t moved yet, since time and volatility crush still have room to work in the trade’s favor as expiration approaches.
The main event, though, is an extended, genuinely educational segment on VIX trading heading into what Brian repeatedly calls the historically volatile September and October stretch. He walks through the VVIX, the volatility of the VIX itself, noting it’s sitting near multi-year lows around 90 to 91, and argues that because these volatility indexes are inherently mean-reverting, a reading this low relative to its 50-day and 200-day averages is itself a signal worth trading around. He builds out the case methodically, showing that the VIX has essentially never sustained a level below 14 over the prior two years, making the current 14.80s reading an unusually compressed starting point heading into a seasonally turbulent period.
Brian builds two distinct VIX trades to express this view, and the contrast between them is instructive. The first is a straightforward long call, buying the September 18-strike call for $1.84 to get simple, uncapped long exposure to a volatility spike, explicitly avoiding any short leg because he doesn’t want to cap his upside if volatility genuinely breaks out. The second is a shorter-term, higher-probability short call spread on the August expiration, selling the 16.50 strike and buying the 17.50 strike for a 24-cent credit, a much more conservative, income-oriented bet that the VIX simply won’t spike sharply within the next seven days. Running both trades side by side lets him illustrate two very different ways to express a similar underlying view, one betting on a genuine breakout with unlimited upside, the other betting on near-term calm with a small, defined payout.
What ties the episode together is Brian’s broader macro framing, referencing a meaningful drop in the market’s priced-in odds of a Fed rate hike, falling from roughly 50% to 40% following that morning’s economic data, alongside ongoing geopolitical uncertainty in the Middle East and Eastern Europe. For traders trying to understand not just how to structure a VIX trade but why the seasonal case for owning volatility into fall might be worth taking seriously, this episode offers both the technical mechanics and the macro reasoning in one sitting.
