Being a career-long options trader, I have been one of the traders enjoying this goose in the VIX as it permits me to rake in some greater premiums when I am selling them. But a funny thing is happening to quite a few of the names I like to play with, like CITI, UYG, XLF and even GE...they are trading so inexpensively that the options premiums barely warrant a trade. What to do?

With CITI currently at $1.20, I consider that an option's price and if I so desire I would just trade the stock. I would say the threshold for most stocks is around $3 or anywhere less than the ATM fee these banks charge. Once they get south of that number it seems to be counterproductive to trade the options from a transaction standpoint, particularly if I am a seller, which I am more times than not. Even selling puts on a name like BAC only gets you $0.30 on the strike just below the money, so what's the point? I love selling puts to get a stock but from a transaction standpoint, it has to make sense.

In some ways it is frustrating because it negates all these wonderfully high volatility levels which produce the beautiful premiums. But that is precisely the reason the stocks are trading so low; the volatility is indicating some may not survive. I find myself trading many more stocks than I have in the past only because they are trading and priced like options. My belief (hope) is someday I will be writing calls on them but we are going to need to see a jump in price for that to be warranted. Until then I am slowly accumulating more stock than I probably wanted and dreading a mundane 20 level in the VIX, but welcoming the accompanying rally. It is not that I am completely long, it is more my disdain for waking up to the same dismal economic news and the hopeless feel it is creating for a whole legion of investors. Good Luck!!

thinkorswim, Inc. and its registered employee, Steve Quirk, do not solicit or recommend any form of trading in the individual stocks (or their derivatives) mentioned above. Please do careful, independent research before investing any money as well as weigh the possible consequences on your particular financial situation before doing so. The risk of loss may be substantial.