Hey Traders,
On Friday, the VIX closed up 1.04 to 20.60.
Despite the giant gap between futures and the VIX, VIX futures movement was robust with the September future actually rallying MORE than the VIX:
This means the spread between the futures and the cash actually widened on Friday…
The spread now stands at 3.60 points
With 30 days to go until expiration that is incredibly wide.
Again this shows how little traders believe in the current levels of both the SPX and the VIX.
So what is the plan?
I think a pair with SPX and VIX makes some sense here.
I would buy a put or put spread in SPX and pair it with VIX puts.
With the spread so wide, there is a serious edge in owning VIX puts…
But remember…traders don't trust this market.
A put spread in SPX will pay if the VIX curve is right and vol is going to go higher.
And they’ll likely pay better than VIX calls because of that spread.
This is the type of trade Andrew Giovinazzi does in SPYMaster every week.
This is the perfect environment for that type of pair trade.
Your Only Option,
Mark Sebastian