Fed Pivot?

Mark Sebastian

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

The S&P 500 closed up 18.78 points on Friday …

The index had a range of over 1%, its tightest range in over a week.

The VIX is back to threatening 20.

Does this mean the good times are rolling and it is time to sell premium …

I am going to give you a hard no.

Yes VIX is dropping but realized volatility remains really high.

While the 200-point up day is still affecting the data … the intra-day range of the S&P 500 has allowed for long premium holders to scalp a lot of gammas.

We also appear to be at an inflection point for VIX …

It’s been holding a tight range for a week …

At some point, something has to give, potentially this week.

I like long SPX straddles and long-dated VIX puts as a hedge against the position … I think traders will like the way that position pays out.

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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