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

As you know, I wrote up research for Mad Money on Monday…

An important note: I think the VIX is going to be below 15 consistently by the end of the year.

Why?

The downsloping SPX and VIX curves say so

Every new low in the SPX brought a lower high in VIX … and new highs in SPX brought a new VIX low.

But now we have the Fed, and something different happened.

We saw a VIX low of 18.35 on Jan. 13. Over the last year, this has led to sell-offs …

Not so this time.

Zooming in from the October low, we see the huge change in trend that took place…

In less than two weeks. we saw a higher high in SPX – one that was HIGHER than the last high – and a new low in VIX.

While I still think the market is built on a house of cards, we might be in for a run here.

The stock market just does not seem to care right now. It is time to be short vol and/or long SPX and long VIX.

We’ll talk about it tonight at 5:30 p.m. during the Trader’s Happy Hour – join us!

Your Only Option,

Mark Sebastian