Futures Aren’t Buying This VIX

The Option Pit VIX Traffic Light Is Green: Volatility Can Go Up.

Hey Traders,

The VIX touched over 32 on Wednesday …

Does it make sense now why the Option Pit VIX Traffic Light has stayed green even as the VIX has made its temporary drops?

It is hard to believe that just over one week ago we were watching a VIX in the 18’s, and thinking that might be a touch high …

But that’s the nature of the market … and the nature of VIX.

However … while volatility spikes like we are seeing now may not be unheard of …

I am seeing something that I have never seen before …

Check out this VIX futures curve:

While the VIX curve is backward to cash, the curve itself is flat … not backwards.

I have never seen the VIX move from 17 to 30 without the curve going full backward.

This tells me a few things …

This type of curve is not very stable. That is maybe not so surprising after the big moves we have seen in the VIX curve over the last several days …

It also tells me that VIX futures are not fully buying into this continued selling.

If they were, we would be seeing a different curve.

I think going forward, we could see the S&P 500 (Ticker: SPX) and Dow Jones Industrial Average (Ticker: DJI) roar higher …

That might help calm the VIX …

But like I said last week, I still think we could see weakness out of the Nasdaq-100 (Ticker: NDX), so proceed with caution …

Your Only Option,

Mark Sebastian

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.