Big Money’s Take On VIX

Mark Sebastian

The Option Pit VIX Traffic Light Is Yellow: Volatility Is Likely To Move

Hey Traders,

Almost all of the indicators for the Option Pit VIX Traffic Light are now red. I could actually flip the light to red, if I wanted to.

But I want to give it a day more. Not because I am scared (I am not) …

I am holding off because Big Money is telling me to.

What do I mean by that?

Check out the largest trade from Friday:

A trader bought close to 80,000 April 30-strike calls. That is no small bet on volatility increasing again.

In addition, we continue to see really skewed put/call ratio”

On Friday, calls outpaced puts by over 3-to-1, as traders took advantage of falling volatility to put on huge hedges.

So how do I play this?

Obviously, I am short volatility right now … but I am hedged.

Why?

See above.

Your Only Option,

Mark Sebastian

VIX Edge

Mark Sebastian

Mark Sebastian is a former member of both the Chicago Board Options Exchange (CBOE) and the American Stock Exchange (AMEX), where he spent years mastering the art of options trading in the most competitive environment imaginable. As Chief Investment Officer at the hedge fund Karman Line Capital, Mark manages sophisticated options strategies for institutional clients. He is the author of two highly regarded books on options trading: ‘The Option Traders Hedge Fund’ and ‘Trading Options for Edge.’ Mark is a frequent guest on major financial networks including CNBC, Fox Business News, Bloomberg, and First Business News, where he provides expert commentary on market volatility and options strategies.

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