The Option Pit VIX Traffic Light Is Yellow: Volatility is likely to move wildly.
The S&P 500 dropped 15 points on Tuesday, off the lows but still down.
The VIX closed up 1.23 points to 22.90 and is now sitting in lock step with the January future:
The VIX move was mostly a weekend effect, but the structure of the curve is pointing toward some severe market cracks…
Something is a foot, how do I know? The answer is the one thing I am watching: AAPL.
AAPL broke a 1 year low and is approaching a 2 year low.
The stock is breaking down the same way that AMZN and GOOGL did.
The question is how far can it go, and what does it do to the NDX and SPX?
Here’s the thing: it all depends on where the money goes…
Today while traders were dumping AAPL, they were buying AMZN and GOOGL….
If that continues to happen, we will see more days like today…
But what if traders just sell AAPL and go to cash…
That is how the S&P 500 starts its true descent toward 3300….and it is coming.
Here is the trade:
I would sell AAPL, buy AMZN (not GOOGL) and Buy VIX puts.
That is a combo that is going to pay very well in 2023.
Your Only Option,
Mark Sebastian