How do I know this?

Let’s learn to measure what a VIX move means.

VIX is 30 day volatility

Think of it as an average range for the next 30 days in SPX.  The higher the VIX the higher the range and the lower the VIX the lower the range.  Every 16 volatility points is a 1% daily move in the underlying security.  A 16 VIX assumes the SPX will move 1% per day on average close to close.

Yesterday VIX rallied up 1.04 points to close at 14.31.  SPX moved more than 1.6% Wednesday which would be a 24+ VIX if traders took the daily moves and pumped up the monthly options to match.  The SPX Mar01 straddle, the call and put, is trading $125.  That is 4950 SPX or 4720.  Not much of a range but the key part is the Fed news is out.  Traders are not looking for radical upside since there was no surprise from Fed Chair Powell.

If the range expectation compresses, VIX goes down.

If the range expectation expands, VIX goes up.

Today will be key to see if the VIX rally holds since the news is out.  There will have to be some good size FOMO selling since the big runup in Tech was partly due to a rate cut hope.  Apple Inc (Ticker: AAPL) might provide a floor if the earnings are decent tonight.  That means the VIX should not drop a lot until Friday into next week.

Part of the 0DTE strategy is when the options get cheap relative to the range Mark or Licia think could happen.  That is when the fun starts.  Join today.