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Blue Skies Buys

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Gray skies are gonna’ clear up
Put on a happy face
Brush off the clouds and cheer up
Put on a happy face

- Bye Bye Birdie

So we’re not exactly Dick Van Dyke. But we’ve got something to tap our toes about, too! The VIX is below 40 and heading lower.

As you might know, the Vix, (aka the Chicago Board Options Exchange Volatility Index) is closely watched by traders to determine how much fear is in the market. The higher it goes the more fear.

And as you can see from this chart, right now it’s heading south. In fact it’s dropped 8% in the last week and now sits at a 3-month low.

That’s good news. Especially since it touched a reading of 89.53 in October – prior to that anything above 30 was considered a high number.

The Trade

Although it's a relief that volatility is coming out of the broad stock market Jon Najarian thinks the trade is where volatility is rising -- in the tech heavy Nasdaq.

And that's meansured by the VXN . As you can see from the chart to your left the VXN is heading higher. That's because there's a slew of conferences going on and the bulk of the names presenting are all Nasdaq names.

So, how should you trade?

“Volatility in inVentiv Health is spiking up ahead of the JP Morgan health conference,” says Najarian. “The trade is to sell the volatility. Own the stock and sell the volatility."

And he adds “BiogenIdec is the polar opposite trade. I think this stock is cheap. I’d buy the stock and buy a put.”

Read More:

> More Volatility On The Way


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Trader disclosure: On Jan 6, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Macke Owns (MSFT), (TM), (MOS), (WMT); Najarian Owns (CSCO), (ERTS), (MSFT), (GS), (XLB), (EEM); Najarian Owns Short Calls (MSFT); Najarian Own (NVDA) Long Sread ; Finerman's Firm Owns (MSFT), (EEM), (DNA); Finerman's Firm Is Short (IYR), (IWM), (MDY), (SPY), (USO), (IJR), (BBT), (GNK)

Jon Najarian Owns (VTIV), (BIIB)

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