The Option Pit VIX Traffic Light Is Red: Volatility Will Likely Move Lower.
Hey Traders,
The Option Pit VIX Traffic Light has been switched to red …
And the S&P 500 (Ticker: SPX) is creeping higher …
Albeit on fairly low volume.
The VIX futures curve is now in a steeper contango, with futures trading higher over spot:
The VIX June future seems to have some premium to it … so it could make for an interesting trade opportunity …
VVIX is still sinking …
It is currently at pre-pandemic levels …
And the last time it was trading this low, the VIX was in the 12’s.
Think about that!
The last time implied volatility (IV) in the VIX was this low, the VIX – which measured IV of the S&P 500 (Ticker: SPX) – was almost half of what it is now.
It will be interesting to see what happens during next week’s VIX expiration on Wednesday morning … which just so happens to be hours before the June FOMC meeting.
For now, I expect to see VIX more or less sit still until Friday's CPI number.
Then we could see some movement.
Like I said, near-term VIX futures have room to move … so front-month options might have some interesting trades.
Just remember a CPI surprise could send us sailing in either direction…
Your Only Option,
Mark Sebastian