The Option Pit VIX Traffic Light Is Yellow: Volatility is likely to move wildly.

VIX was up 1.08 points on Thursday closing at 20.71.

This was on a day that the S&P 500 dipped to 4081.50 – down 36 points – or just .88%.

VIX has vastly outperformed to the upside relative to SPX downside. This is a shift….

VIX has spent months lollygagging its way around while SPX moved pretty wildly.

The VIX curve is bordering on a flip into partial backwardation:

One more up day for VIX and it will be trading above February, and maybe March.

The craziness continues in VIX options where VVIX blew higher again, briefly breaking 100.

The index has not been this high since Octoberr. Something BIG is about to happen.

Could it be CPI?

Maybe. That number is the most important economic event other than the Fed.

The frank answer is we do not know exactly what is happening, but the guys that are playing chess (vol traders) while equity traders play checkers are sending a very strong message.

There is going to be a volatility event.

I would be short SPX and short VIX. An alternative would be to buy VIX calls and puts via a strangle.

Either is almost certain to work.

Call my Customer Care team now for the best way to access these types of trades and more.

Your Only Option,

Mark Sebastian