Very interesting article in Barron's this weekend from two of my colleagues at CS. Last week was the first time the VIX stayed under 60 for all five trading sessions, but investors should not be lulled into complacency. Messrs. Tom and Davitt submit that it can go a lot higher.
Like many folks I believe stocks are cheap and have been buying them selectively -- but often with a "buy-write" derivative hedge. I wrote the Nov 40 calls on HNZ and was proved spectacularly prescient when the stock closed at 38.75 on expiration (never mind that I had to sell anyway for liquidity!). Long term investors should consider writing more calls, but remember that what you consider a steep premium may seem like peanuts in a few weeks. I'm going to short half my position with covered calls, and be prepared to short more if the VIX spikes in line with the article's perspective.