Almost every day this week SPX rallied at some point in the morning only to turn around at some point.  Granted the 500 point SPX rally was pretty sharp but jeez volatility woke up in a hurry.  The FOMC meeting did punch down volatility for a bit Wednesday but it popped back up Thursday quite a bit.   I do remember the tone change when I could not close VIX call spreads and all of a sudden the market got the up VIX religion.

However VIX did fail to cross one barrier today.

What was it?

VIX did not cross into Zone 3

Zone 3 is 13 to 17.99 with VIX closing 17.55.  That is hot footing it from a low in the high 14s just last week.  My only guess is Fed Chairman Jerome “Jpow” Powell  is going to toss cold water on everything.  How can rates drop with $1.7 Trillion in new government spending?  The market wants it for some dumb reason because for the last 15 years they have been given a limitless supply of liquidity and now that train should be coming to a halt.

In this case my head was telling nothing but the volatility told me to close my SVIX longs for a small ding.  I still have an SVIX trade that can pay. I stuck to the plan but also closed ⅓ of my long VIX contracts.  If my head was right and vol was right, as in the screaming SPX rally, I will take a little less for my long VIX.  If we get a quick trip to 5400, the plan should still pay.

My VXX strangle was just a Daily Style trade in the Trading Desk as part of the new Core 4.  If VIX does jump, it should pay well.

Check out how to use the Yield Zone and the Core 4 for improved trading.  See it here.

To Your Trading Success,

AG