The Option Pit VIX Traffic Light Is Yellow: Volatility is likely to move Wildly
The S&P 500 blew higher on Wednesday post Powell speech running up over 3%.
The NDX did even better, running up 4.58%…AAPL ran…
The VIX closed at 20.58, threatening to break 20 yet again…
So with this move, what is next?
Well for the 1st time since April 20th, the S&P 500 closed above the 200 Day moving average:
VIX futures also fell. The curve is now somewhat normal with December futures trading at 1.50 points above the VIX cash index…
Jan is still REALLY expensive:
So what do I think is next?
The key is the 200 day moving average….can we hold it…
My gut says no, maybe we hold it for a day or two. My guess is non-farm payrolls send us lower…
Regardless…VIX is not going to the 30s anytime soon without a serious catalyst (AAPL?)
You have to be short volatility, I like doing it in January.
I would be trading same day options in SPX and going home flat…
Alternatively, I would buy SPX calls and VIX calls in December as a pair.
Your Only Option,
Mark Sebastian