The Option Pit VIX Traffic Light Is Green: Volatility is likely to stay high.

The S&P 500 dropped 78.57 points yesterday, closing at a new low this week…

The VIX did NOT hit a new high, though.

But that does not mean that we are starting to calm down.

Let’s looks at the VIX curve:

October is below where it was on Wednesday, but the other front month contracts?  They have moved higher.

The back end of the curve … also higher.

This is a market that is bracing for a move.

It’s not sold that the moment happens in October … we are likely oversold (not that we cannot go lower).

But the march up in November futures is telling.

While VIX volume was slower on Thursday, I would note that the big trades were NOT positioning for a drop in vol

VIX is prepping for a pop …

I like long VIX call spreads in Nov. hedges with puts, still.

Questions? Shoot me an email or comment below!

Your Only Option,

Mark Sebastian