Here’s What’s Driving These Wild VIX Moves

Mark Sebastian

The Option Pit VIX Traffic Light Is Yellow: Expect Wild Moves.

Hey Traders,

If you just looked at the closing price of VIX, you probably would have thought that the light turning yellow was wrong.

But on Monday, the VIX made a wild move.

It started the day WAY up, and ended the day pretty much flat (adjusted for the weekend).

The VIX had a huge intraday range on Monday…

VIX got over 23, only to end the day near 19.

That is a pretty wild day!

The big driver?

The Nasdaq 100 (Ticker: NDX).

The NDX, which has clearly been the driver behind VIX that last few weeks, had a massive midday turnaround on Monday:

For at least a day or two, the bottom might be in the NDX (and Invesco QQQ Trust (Ticker: QQQ)).

We could see a pretty strong short squeeze and a drive lower in VIX back toward 17.

This will likely put ProShares Ultra VIX Short Term Futures ETF (Ticker: UVXY) below 11.

VIX is 19.4, up from under 17 on January 4th. In that time, UVXY is up just 0.48.

I would be a buyer of the UVXY Jan. 12-strike puts and the Jan.28 12-strike puts as well.

I think they will likely pay, if bought early, a decent amount by the end of the day.

Your Only Option,

Mark Sebastian

VIX Edge

Mark Sebastian

Mark Sebastian is a former member of both the Chicago Board Options Exchange (CBOE) and the American Stock Exchange (AMEX), where he spent years mastering the art of options trading in the most competitive environment imaginable. As Chief Investment Officer at the hedge fund Karman Line Capital, Mark manages sophisticated options strategies for institutional clients. He is the author of two highly regarded books on options trading: ‘The Option Traders Hedge Fund’ and ‘Trading Options for Edge.’ Mark is a frequent guest on major financial networks including CNBC, Fox Business News, Bloomberg, and First Business News, where he provides expert commentary on market volatility and options strategies.

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