5 Alive: VIX up AGAIN

Yo Pit Crazies,


A 6.2% Consumer Price Index (CPI) number.


Pardon my French, but what the hell!?


I can’t remember a 6 handle on inflation since I was a wee trader back in the early 90s.


(And Griff has been killing the inflation trade, with no end in sight. Check out his Power Income Trader. Hot, hot stuff.)


Thirty years of blissful, low inflation.


It almost makes you think if Joe Biden did the opposite trade on everything he has tried in the last 11 months, inflation would be under control. 


But it aint, and VIX don’t like it.


Maybe a little cream comes off the top of some of these big tech valuations.


Either way there is a trade for this.


VIX up for 5 Days, But Vol of VIX Relatively Muted


For the last week the market has been waiting for a higher CPI number.


Expecting it, really.


In that time, VIX futures have been relatively expensive. 


Even yesterday, with a larger selloff at one point, the iPath Series B S&P 500 VIX Short-Term Futures could only move up .70 or so.


Five days is still quite a bounce from the 14.70 of just last Wednesday.


Vol Man rides the wave.


The question is, does this selloff hold?


I think we could see more downside, because VIX closed “outperforming” the SPX selloff. Essentially, SPX came back, but the bid for VIX persisted.


Guessing 2% from here by Friday.


So …


Long SPY. Long VIX. The realized vol double-double.


Catch it in the Volatility Trading Club on Wednesday nights.


The Rundown


Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

      • I might have a nice chance today to sell my SPDR S&P Oil & Gas Exploration & Production ETF (XOP) Jan. 21 90 puts this week and leave myself with a call spread for a credit.  I am holding some puts in our positions so any selloff and I will take some profits.


Power Income Trader:

Power Income Trader is a systematic approach to trading inflation.  By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.


      • Griff is going LIVE on Friday at noon EST to talk sky-high CPI and more ways to make money riding the inflation trade. Grab your spot here.


      • Queen of the Candlestick Licia Leslie put her touch on Griff’s TLT recommendation from his launch event this week


Her TLT Nov. 19 150.50-strike puts opened and closed for a 100% gain yesterday.

Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session. 


The Pro Room was using the rally yesterday to take profits:


STO Jan FSLY 45 puts collecting $3.21


      • I sold some Coinbase Inc. (Ticker: COIN) 250/200 put spreads in the Jan cycle.


Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.


      • Mark Sebastianadded a Ford Motor Co. (Ticker: F) call buy today. The Rivian Inc. (Ticker: RIVN) IPO has that company valued at $70 billion and it has not sold a car yet.


Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle/calendar trading vehicle. The goal is to teach students the best times to buy options.


      • I sold calls in Barrick Gold Mining Corp. (Ticker: GOLD) yesterday, which should leave us a 70% net gain on my January calls.


Volatility Edge & Volatility Trading Club:

Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use VIX future decay to pay for upside Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.

The Option Pit VIX Light Is close to Yellow after VIX jumped into Zone 3 (18-23).


I sold upside VIX call spreads today for Trade No. 266, which gives me a free put ride to expiration. I own upside VIX, VXX and SQQQ going into the Nov. and Dec.


Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!


To Your Trading Success,


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