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Entry from December 27, 2010
“VIX is high, time to buy; VIX is low, time to go”

VIX (often called the “fear index” or “fear gauge") is the ticker symbol of the Chicago Board Options Exchange Market Volatility Index. The adage is: “When the VIX is high, it’s time to buy; when the VIX is low, it’s time to go.” When VIX is high, there is much fear in the market and it might have hit a bottom. It’s time to buy. When VIX is low, there is much optimism in the market and it might have hit a peak. It’s time to sell.

VIX began in 1993 and the adage has been cited in print since at least 2000. Not everyone agrees that the adage is a correct investment strategy, however.


Wikipedia: VIX
VIX is the ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market’s expectation of stock market volatility over the next 30 day period. The VIX Index was introduced by Prof. Robert Whaley in 1993 while he was at Duke University. Whaley currently teaches at Vanderbilt University.

Google Groups: misc.invest.options
Newsgroups: misc.invest.options
From: (Scotch)
Date: 2000/08/18
Subject: Re: VIX is in a 2 year =>buy straddles or strangles

Can’t remember where I read it or I’d attribute it:
When VIX is low its time to go.  When VIX is high its time to buy.

Google Groups: microsoft.public.investor.discussions
Newsgroups: microsoft.public.investor.discussions
From: “Nick Zarczynski”
Date: 2000/08/18
Subject: Re: Daily Market Recap 8/17/00

Watching the VIX
By Mary Redmond
Nowadays most options traders watch the VIX.X. The saying goes when the VIX is high it’s time to buy, when the VIX is low its time to go.

Google Books
The Stock Market Course
By George Fontanills and Tom Gentile
New York, NY: Wiley
2001
Pg. 293:
Wall Strret has many axioms or clichés. However, there’s one I consistently live by, and it makes the VIX level easy to understand: When the VIX is low (<20), it's time to go. When the VIX is high (>30), it’s time to buy.

Optionetics Discussion Boards
tw (33 posts) wrote on 4/20/03 2:06 AM
edit:
So basically my question is:
The phrase, vix is high time to buy, vix is low time to go suggests to trade strategies when it is high, but when it is low, do not trade??

Google Books
The Options Course:
High profit & low stress trading methods

By George Fontanills
Hoboken, NJ: John Wiley & Sons
2005
Pg. 432:
An adage among options traders says, “When VIX is high, it’s time to buy. When VIX is low, it’s time to go.”

Optionetics Discussion Boards
1dawson (33 posts) wrote on 6/9/05 2:54 PM
The teaching material states when the VIX is high time to buy when the VIX is low time to go(sell) annd gives a threshhold of 20-40. 

Google Books
The Index Trading Course
By George Fontanills and Tom Gentile
Hoboken, NJ: John Wiley & Sons
2006
Pg. 280:
There is an adage among traders that “When VIX is high, it’s time to buy. When VIX is low, it’s time to go.”

The philosophy underlying the adage is that when VIX is high, investors are relatively pessimistic and expect high levels of volatility going forward. At that time, the contrarian turns bullish on the market. It’s time to buy stocks. In contrast, when VIX is low, it is time to go (i.e., to get out of the market). The crowd is complacent and optimistic. From a contrarian approach, it is a poor time to buy stocks and, in fact, it’s “time to go.” In short, high VIX means buy stocks (not options), but a low VIX urges caution.

Askchrishetrades
Wednesday, August 05, 2009
**Vix is high time to buy, Vix is low time to go** Is that how it still works?

StockFetcher
Eman93
9/5/2009 4:04:15 PM
VIX is high time to buy, VIX is low time to go........

CNBC
Is the Low VIX a Warning for Stocks?
Published: Wednesday, 23 Dec 2009 | 11:33 AM ET
By: Patti Domm
CNBC Executive Editor
(...)
There is, of course, the old Wall Street saying: “VIX low. Time to go.”

Options Trading
VIX: The CBOE volatility index
Jul 6, 2010 by richard
(...)
Other way to use it is as a contrarian indicator. The old saying goes:” VIX is higher, time to buy; VIX is low, time to go (sell)”.

Google Books
Debunkery:
Learn It, Do It, and Profit from It - Seeing Through Wall Street’s Money-killing Myths

By Ken Fisher and Lara Hoffmans
Hoboken, NJ: John Wiley & Sons
2011
Pg. 84:
BUNK 21
WHEN THE VIX IS HIGH, IT’S TIME TO BUY
And when it’s low, it’s time to go. Or is it? 

Posted by Barry Popik
New York CityBanking/Finance/Insurance • (0) Comments • Monday, December 27, 2010 • Permalink