The Option Pit VIX Traffic Light Is Green: Volatility Could Go Higher.

Hey Traders,

If things close the same way tomorrow though, it should quickly flip back to yellow and possibly even red …

But for now, we are still green.

That does not mean I am not being proactive.

I see lots of opportunities in trading VIX, ProShares Ultra VIX Short Term Futures ETF (Ticker: UVXY) and iPath S&P 500 VIX Short-Term Futures ETN (Ticker: VXX) right now.

The VIX curve has somewhat normalized back into a contango:

While VIX is below February, and Feb below March, the rest of the curve is still VERY flat.

We are not out of the woods yet …

But one thing to keep in mind is that VIX can drop VERY quickly.

In the past three months we have seen two greater-than-10-point drops in the VIX over the course of a trading week:

We appear to be in a similar move right now.

VIX could drop to 20 this week!

Traders are getting scared quickly, but no one wants to be left holding the bag,

Thus there seems to be a rush to exit when VIX does come off.

The 21-strike puts cost $0.80, and these were $2.85 on the 12th …

Now, they obviously could go to 0, but if I thought the VIX was gonna dip below 20,  this would be a simple option to quickly double my money …

Your Only Option,

Mark Sebastian