Been looking into different indicators and came across the CBOE skew index. It measures tail risk in the market.
I haven’t used it before but I wonder if it’s actually useful for short term trades. Some sources say it helps predict market moves but I’m not sure how reliable it is.
It would be good to hear from someone who’s actually tried it.
Tried the CBOE skew index about two years ago during a really volatile period in the markets.
Honestly, it felt like trying to drive while looking in the rearview mirror. The signals came too late for the quick trades I was making.
Lost around $200 following its readings on some Apple options before I gave up on it completely.
CBOE skew readings above 135 indicate potential downside risk. Below 120 suggests complacency.
Data shows mixed results for short-term trades:
• 15-minute timeframes - poor correlation
• Daily trades - better accuracy
• Works during high volatility periods
Test it alongside VIX for confirmation.
Used it for a while but didn’t find it helpful for quick trades.
CBOE skew index is not easy to access on mobile apps. Many do not support it.
From experience, it suits longer term trades better. For quick trades, its signals may lag too much.
Consider paper trading to see if it fits your strategy.
Skip it for short term trades. The skew index works better as a background filter rather than a primary signal. When it spikes above 140, I avoid call options completely and look for put opportunities instead.
What actually matters is combining it with price action. If skew is elevated but price keeps grinding higher, that divergence often leads to sharp corrections within days.
Most traders overthink these exotic indicators. Focus on mastering basic support and resistance first, then add the skew as confirmation later.