I sold a lot of covered calls today.

No, it is not due to summer 2015 pattern signaling a top today, altough the analog is fascinating image

More importantly: complacency has kicked in.

Sentiment had shifted too much too fast.

I’ll illustrate it with volatilty term structure.

30day implied volatility/3 month implied volatility. Now below 0.8.

Other occasions in last 2 years shown in blue circles.


Can the market continue higher? Sure. This is a game of odds, not certainties.

But the odds are that there is very little immediate upside left.

Market will likely unwind extreme conditions either directly thru price or thru time. Short call position benefits from both.