The Option Pit VIX Light Is Red, And Volatility Is Likely To Drop.
Hey Traders,
Thursday was a slow day for VIX trading…
Apparently all the would-be VIX trading went to AMC (which traded over 4 million contracts!) …
But there was one giant whale of a customer that executed two huge trades simultaneously.
Given the recent action of the VIX (finishing higher on Thursday) …
I find these trades REALLY worth talking about!
Like I said, Thursday was a slow day for VIX trading.
While activity has certainly picked up in the last few weeks, there are still some days where trading is REALLY slow.
Thursday just happened to be one of those days, with fewer than 350,000 VIX contracts crossing the tape.
And the crazy thing is that over 20% of those contracts were traded in what appears to be one trade!
One lone customer bought 23,800 of the September 18-strike puts for $1.27, and then just 0.19 of a second later …
The same customer bought 47,600 contracts of the July 16-strike puts for $0.40!
This is quite a sizable bearish bet on the VIX, and on a day that meme stocks were running wild — which ALWAYS puts pressure on the VIX to go up (see yesterday’s post).
The trade took place towards the end of the day …
Given the movement in AMC Entertainment (Ticker: AMC) and other meme names toward the close (pulling back slightly), this has me wondering …
Is the meme train running out of steam?
Did we, in fact, reach peak meme today?
My gut says that ‘memeby’ the case …
With the VIX curve holding pretty darn steady, I think we could see a vol drop to end our week …
Your Only Option,
Mark Sebastian