After 245 Days, Is It Finally Here?

Hey Traders,

 

We’ve been waiting for months for the VIX to finally admit defeat.

 

The index has been holding above 20 for 245 straight days …

 

To put it in context of Valentine’s Day (ahem, reminder!), this run has lasted longer than the majority of my relationships!

 

Anyway, not a record, but pretty darn close …

 

Certainly a record for a bull market, which by the way, we are in.

 

But on Thursday, something happened that I had not seen in the last year …

 

The SPX sold off and the VIX did not pop.

 

Take a look at the price action from yesterday below:

 

When the S&P 500 sold off, the VIX went up. But unlike in the past year, the VIX did not explode … it only marginally rallied and couldn’t hold that pop.

 

Hmmm …


So what does this mean for VIX and what does this mean for you?

 

Sub-20 VIX is coming. Maybe today, maybe mid next week …

 

But it is coming.

 

The Volatility regime is changing and traders are going to need to get used to trading a sub 20 VIX environment again.

 

The one stock that I love out of all of this is CBOE.

 

VIX volume is down 30% year-over-year — because there are no hedgers.

 

The VIX works great as a hedging product when it's 12, but once it explodes, it is no longer a suitable hedge…

 

Until it normalizes.

 

And normal VIX is in the 13-15 range

 

That is coming sooner than you think.

 

The Option Pit VIX Light is Red: Short vol is going to work.

 

Your Only Option


Mark Sebastian

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