Going Down … Slowly

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


Hey Traders,


The VIX got hammered on Wednesday.


With the S&P rallying 38 points — still below its high from Friday — the VIX index got SMOKED:



So the question is …


Where to next?


On Thursday morning VIX was continuing its move lower …


This is key — I want to see the VIX get back below 17 and into the 16’s.


If that happens then the “blip” of a selloff might be over and 4200 could be in the cards for the SPX.


I also like the fact that the iShares Russell 2000 ETF (Ticker: IWM) finally feels like it is getting a bid. On Thursday morning it was the strongest index — after being VERY weak:



If IWM can get above 226,I think it could make a run back at the highs from March.


A VIX Play


And what does that mean for volatility?


We will have our blips in vol, but the trend in VIX appears to be a slow path lower.


The VIX May 15 puts are .10.


I think those are cheap and I would be a buyer.


My plan would be to sell ½ my position at .20 and then ride the rest lower.


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


Your Only Option,


Mark Sebastian

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