The Option Pit VIX Traffic Light Is Yellow: Volatility is likely to move wildly.
Hey Traders,
On Tuesday, the S&P 500 held a really tight range … until it didn’t.
That was an ugly close:
The S&P 500 closed near the lows for the day, despite the NDX being up.
Even so, the NDX ended weak as well.
The VIX closed up mildly, ending the day at 17.99
Wednesday expiration appears to be set for an “everyone loses”, as my guess is VIX closes between 17.75 and 18.50.
While expiration is important and exciting, what got me excited was a GIANT trade in VIX that went up:
On a 1 by 3 ration a trader sold the Aug 40 calls and bought the Aug 60 calls … paying a debit.
This is almost certainly a credit player, but it is another sign that the market is still worried about a shoe to drop.
I don’t blame them – the S&P 500 has been so range bound the last few months.
Check out the S&P 500 since April 6th:
A whole lot of nowhere.
A breakout is coming, the trades tell us.
Be ready …
How so?
Using the trade we set up today in the Trading Desk obviously!
Questions about that? Leave a comment below!
Your Only Option,
Mark Sebastian