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

Thursday was a total rug-pull.

Up until 3 p.m. ET, it looked like the market was going to close on the highs.

I thought so … and so did every trader I talked to.

Then the market flushed:

Over the course of about 45 minutes, the S&P 500 tanked and ended up closing on the lows of the day.

But here is the thing…

There were smart people involved that knew this was coming.

At 3:02 p.m. a mystery vol trader known as “50 Cent” jumped in and bought VIX calls

50 Cent – not to be confused with the rapper (well, probably not) – is a credit fund manager who buys calls when he sees a ton of value in credit. He then hedges with VIX options.

After that, another bomb. This one I was alerted to courtesy of my friend Cem Karson …

George Soros bought S&P 500 futures 4050 puts right before the dump happened…

So, two huge players in the options business are saying we are at a near-term crossroads.

We are likely to open down today …

The question is, do we get a dip-and-rip or do we follow through?

They both are betting on the latter.

I’m looking to buy S&P 500 puts expiring on Monday afternoon and hedging it with UVIX puts or UVXY puts expiring on Friday.

Questions? Leave them in the comments below!

Your Only Option,

Mark Sebastian