Yo, Pit Crazies,

In the ultimate irony, the Federal Reserve has succeeded in making the dollar ruin everyone’s life except, of course, Vladimir Putin.

Putin is just dealing with old fashioned civil unrest as he calls up 300,000 volunteers. (Will Ed Snowden be among them?)

Global markets, meanwhile, are dealing with the Great Powell Reshuffle. VIX closed green with markets generally having a down day on Monday …

But we did get a bit of a surprise.

VIX Had a Real Backward Close 

Four percent 10-year rates on T-bills will do that to you.

Tomorrow’s post will undoubtedly be the rout in commodity prices, but for now I will focus on VIX. (You would think lower commodity prices would mean lower inflation, but I digress.)

Real backwardation in VIX cash over all the  VIX futures is usually a sign all is not well.

– Backwardation is short term over long term and usually signals larger realized volatility

– Contango is long term over short term and usually signals less realized volatility

It’s downright bad as a matter of fact.

A few days ago I mentioned that Oct./Nov. VIX futures just backward to each other could be a problem. Well, Oct. VIX has gone straight up.

At this point implied, vol has taken off and, as VIX cash rises, the futures will get dragged higher.

I selected a VIX call butterfly to ride VIX higher in my Pro session Monday afternoon.  I also added an upside call spread in SPY.

Why?

Because the Fed’s usual suspects will be speaking all week. That never goes to plan and markets could go anywhere.

The Oct. 14 straddle in the SPDR S&P 500 Trust ETF (Ticker: SPY) is $20. That is some move.

The Rundown

Big Money Flow

Mark took the bucks in Luminar Technologies Inc (Ticker: LAZR) Sept. 30 8-strike puts for a 32% gain today. Nice run lately there.

To Your Trading Success,

AG