It Goes Until It Doesn’t

Mark Sebastian

The Option Pit VIX Traffic Light Is Yellow: Volatility is likely to move Wildly

The S&P 500 had a huge range on Tuesday.

At one point, the index was up 70 points. It was also down for a time.

In the end, the S&P 500 closed at about the spot where it opened on Friday.

Yes, the S&P 500 took a dive on the missile hitting Poland …

But if you watched the S&P 500, it was already weak and trending lower when the news hit.

VIX, meanwhile, was already running higher:

So what does this mean?

The Poland story was more an excuse to sell rather than the reason we dumped.

While I think there could be a move to 4080, the market does not trust this rally.

One more time …

Traders would be smart to buy SPX strangles and VIX puts.

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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