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

Hey Traders,

The VIX closed at 16.46: a new low for the year.

This was on the back of the SPX closing down .35 points.

.35 POINTS!

That realized volatility is about as close to zero as you can get.

We have not seen realized volatility fall off a cliff:

HV is going to DIVE on Thursday because of the action on Wednesday.

ATR is going to drop dramatically over the next few days as well.

But what’s interesting is that in the last two days, VIX options have woken up.

I mentioned that VIX options exploded on Tuesday, especially that massive call buy.

Thursday did not feature a 100k lot call buy tied to 100k combos,.but actually exceeded Wednesday in call and total volume.

There were some huge trades, notably 63k of the June 26 calls being bought. The trading on Wednesday was one sided…

Bullish volatility via long calls.

The smart money is clearly thinking we’re starting to top out.

Or is it playing for something bigger?

Your answers will come TODAY with my best trade for the rest of 2023.

Questions about that? Comment below!

Your Only Option,

Mark Sebastian