Yo Pit Crazies,

If you missed Voz and Mark during their Trade to Close show, you have a shot at it again here.

In the warmup for the Voz and Mark show, I was pretty adamant about the VVIX collapse showing a reversal of fortune for VIX and SPX.  Basically, I was talking up the OP Newsletter write-up I did yesterday and my 2x VIX futures ETF (Ticker: UVIX) webinar next week.  Well SPX did not exactly rocket up.

But it did not crash either.  VIX?  Down on the day!  So my bold prediction was somewhat true and SPX did not crash but just finished down .13% after down nearly 1% on the day.  VVIX?  Up 1 tick or .01 so not the stuff of legends.  Very acceptable given how bad the sentiment has been.

But the VVIX indicator held up well for a non-crash today.  After all, I did not see the move back up until the end of the year.  Yet another fun indicator unique to Option Pit popped up today during the Trading Desk.

So you might be surprised by the “tell” going into NFP numbers today…

The Edge Hunter Butterfly sheet showed some upside skew edge

Knock me over with a feather.  I say this because the market is pricing options near to just out of the money on the upside relatively more expensive than options way OTM.  That means traders are planning for a burst up tomorrow in NFP.  My guess is about 1%.  Maybe the short-term relief rally folks were looking for?

One thing about skew is that it prices the next move, not the current move.  Traders are looking up not down.  Today stocks could not hold a selloff at all, once again, with VIX finishing down.  I am calling for a short-term pop tomorrow.  I adjusted a trade during OP Mentoring to add a little more call upside in the SPY Oct13 430 area once I saw how the market makers were pricing the upside.  If we pop hard tomorrow, I will sell those calls and see what next week brings.  

Speaking of next week, I will talk about UVIX and split. You might want to be there.

To your trading success,

AG