Big Moves From SPX

Mark Sebastian

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

Hey Traders,

Over the last week, we’ve seen some pretty big moves out of the SPX.

One Friday the index rallied 53 points – a near 1.5% move.

Interestingly, with the SPX rallying in big fashion, traders have come for VIX:

The chart above shows how the futures have moved between Tuesday’s and Thursday’s close.

The spread between cash and the futures is starting to tighten up. It’s now trading at 1.75 points above the cash – still wide, but not the insanity we have seen.

Even so, I think there is huge edge in being short the VIX futures in the right way, via puts or the future.

At the same time, the SPX straddles continue to be WAY too cheap.

We moved 53 points on Friday. Check out the straddle for Friday in SPX:

Buy it and short VIX.

Questions about that? Leave a comment below!

Your Only Option,

Mark Sebastian

VIX Edge

Mark Sebastian

Mark Sebastian is a former member of both the Chicago Board Options Exchange (CBOE) and the American Stock Exchange (AMEX), where he spent years mastering the art of options trading in the most competitive environment imaginable. As Chief Investment Officer at the hedge fund Karman Line Capital, Mark manages sophisticated options strategies for institutional clients. He is the author of two highly regarded books on options trading: ‘The Option Traders Hedge Fund’ and ‘Trading Options for Edge.’ Mark is a frequent guest on major financial networks including CNBC, Fox Business News, Bloomberg, and First Business News, where he provides expert commentary on market volatility and options strategies.

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