The Option Pit VIX Traffic Light is Yellow: Volatility Is Going To Move.

Hey Traders,

Over the last six months, EVERY expiration week (standard expiration on the third Friday of the month) has been the softest week of each month for the market.

In each of those weeks, the S&P 500 (Ticker: SPX) has reached a month low before bouncing. 

But October is different.

Since September expiration, SPX has never really picked up …

The index has not been above the 50-day moving average all month!

This is a clear change in trend …

So the question?

Do we still sell off this week?

I am not sure either way. My gut says yes, but check out the VIX trading:

Puts are blowing up today. Traders are notably buying up the Oct. 17-strike puts …

Despite the sell off in VIX, the Oct. future is still trading on top of the index:

Could this be the week where expiration is bullish?

The VIX says yes, but my gut says no.

Your Only Option,

Mark Sebastian