Hey Trader,

On Monday,  with the market essentially closed a chunk of Wall Street was out for Yom Kippur (Shana Tovah to my friends of Jewish faith).  The SPX managed to climb 17.39 points.

VIX took it on the chin closing at 17.20,  coming off a weekend,  nicely down.

Yet all is not so pretty.

While the VIX may have been feeling the rally,  VIX futures did not.

Check out the movement over the last 3 days in VIX futures.

From Friday’s close,  the front end of the VIX curve is actually higher… and October is essentially unchanged from Thursday’s close.

Yes,  the SPX managed a close above key support around 4330,  but it took a rally in the final 5 minutes of the day to make that happen.

Monday was essentially kind of an ignore this and move on kind of day.

However,  it is curious that on an inside day,  VIX futures were up.

Why were they?

Bonds.

The long bond got crushed on Monday due to the government shutdown threat…markets were able to ignore this on Monday…

They probably won’t if there is any follow-through.

I think you want to take a position of short the curve (long Nov short Oct)

And hedge that position with a put play in SPX.

There is a chance for a break out lower in markets….but if they don’t,  October is going to get crushed.

Thus,  I think this play is going to pay off nicely.

Questions about that? Leave a comment below!

Your only option,

Mark Sebastian