Am I Wrong Here?

The Option VIX Light Is Red, and Volatility Is Likely to Drop.


Hey Traders,


While the VIX moved over 20 the day after I floated the idea that it possibly might not …


That wasn’t really my point.


The idea yesterday was that the VIX was probably heading lower, back to more serene, pre-pandemic levels …


And I pointed out that a customer bought 10,000 July 15 puts gambling that it would drop.


So, with what happened yesterday, does the smart money think I am wrong?


Check out the volume on the 19, 18 and 17 puts in April:



About 70,000 contracts were traded on these strikes — almost all buys. In fact, I spent the bulk of the day trying to buy the 17 puts for .05 … to no avail.


Why? Because traders were paying .1 all day.


While calls DID outpace puts on Thursday, some of the biggest prints were put buys:



Institutional money bought the May 17 puts, the April 19, 18 and 17 puts and — piggy backing on yesterday’s size trade — 12,000 of the July 16 puts for .175.


All of this big money paper flow points towards Thursday’s price action being an anomaly that could last a day (or a few days) …


But it’s not something that breaks away from the theme of a falling VIX.


Like me, the smart money thinks the VIX is going lower.


I’m still a buyer of the 17 puts for .05 … in fact, I kind of hope we go a touch higher today so I can finally buy them.


The Option VIX Light Is Red, and Volatility Is Likely to Drop.


Your Only Option,


Mark Sebastian


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