The Option Pit VIX Traffic Light is Red: Volatility Is Likely to Drop.
Hey Traders,
Yesterday I told you about two trades that you could look at into tomorrow’s VIX expiration.
These options did not go unnoticed …
Heading into expiration, VIX October options are extremely active.
Here is what is going on …
If you bought the VIX October 16-strike puts for $0.05 yesterday, you are currently up about 200% on those puts.
The October 17-strike puts I pointed out that cost less than $0.50? They are up 100% too.
But, they might not be done …
The VIX options expiring tomorrow morning are extremely active.
Check out the volume on the 16 and 17 puts today:
At the pace they are trading, the 16-strike puts will do 50,000 contracts today, and the 17-strike puts probably close to 40,000.
Why?
Because there is a lot of juice left in the October future:
With $0.50 of premium, if the VIX stays around 15.70 we can expect the October future to drop below 16.
This will put those 16-strike puts over $0.25!
I would also like to point out there is a nice premium baked into November as well; do not be surprised if that starts to fall off as well.
There is a lot of money to be made on VIX for those willing to grab it!
Your Only Option,
Mark Sebastian