The VIX Options I Like To Play This S&P Pattern

Mark Sebastian

The Option Pit VIX Traffic Light Is Green: Volatility Is Likely To Stay Elevated.

Hey Traders,

At a minimum, Wednesday was a phenomenal short squeeze.

We saw the S&P 500 (Ticker: SPX) boom higher by 107 points to 4277 …

But it is stuck in a pattern of trading.

Check out this chart of the S&P 500 over the last 3 months:

We have seen the S&P 500 hold a level for a while … give it up … and then hold a new level …

Right now, the S&P 500 has been holding the 4200-4300 level.

The question to ask is … will it break this level?

I am here to tell you the answer is yes.

There are A LOT of known unknowns ahead.

We had today’s Consumer Price Index (CPI), VIX expiration on the 15th, Producer Price Index (PPI) on the 15th, FOMC on the 16th, and next week is a Quadruple Witching expiration …

How has that gone the last year?

With the drop in liquidity from market makers and dealers as they rebalance, shorts have used this as an opportunity to pounce.

Now we might break the pattern next week … it COULD happen …

But I would like to own VIX 35-strike calls if the pattern continues …

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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