BY MARK SEBASTIAN
November 7, 2023
Hey Traders,
The VIX is now trading 14.89.
The S&P 500 is over the 200 Day Moving Average, the 50 DMA and the 21 DMA.
The rally off the lows from the 27th was VIOLENT
In 5 days we rolled over a sell off that had taken about 2 ½ weeks.
We are now at a point where implied is trading at a steep DISCOUNT to implied
The opposite of where we were just a week ago.
So what does this mean for markets?
Well if you look at bonds, the sell off in yields/rally in bonds is what really set this whole move off.
Bonds are really at the crux of everything going on in this market. Our guy Bill Griffo is legitimately the best source of understanding how the bond market affects stocks, volatility, just about everything…
You should join him in Win the Week if you haven’t already…Bill will tell you, we have a ton of bond Auctions going up this week, and those are going to set the stage for the next move higher, or the next move lower.
Looking at VIX and how it has reacted to the move in Bonds/SPX…
The futures are now probably too cheap given how much we could move off the upcoming bond auctions:
Take a look at pricing at this point;
The opposite of where we were just a week ago.
November with more than a week to go is trading only .70 above cash, December with 6 weeks is only 1.50, those are too cheap.
I think we want to be buying VIX strangles….
The VIX December 15 puts are about .85, the 17-27 call spread is less than 1.00
That is not expensive.
Questions about that? Leave a comment below!
Your Only Option,
Mark Sebastian
Mark Sebastian
Founder & CEO, Option Pit
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