How I Would Trade This Vol Action …

Mark Sebastian

The Option Pit VIX Traffic Light Is Green: Volatility Is Likely To Stay Elevated.

Hey Traders,

Well, the Option Pit VIX Traffic Light is still green …

But only barely.

We could see a switch to yellow any time now …

Take a look at the VIX futures curve …

While I would not say it is completely back to “normal” yet …

It is much closer than it has been over the last month in backwardation!

While iPath S&P 500 VIX Short-Term Futures ETN (Ticker: VXX) has come down quite a bit from its early-week high all the way up at 41.65 …

It still not tracking quite as low as it “should” …

As of Friday afternoon, VXX is higher on the day, while the VIX and its futures are lower …

VXX is still broken …

What does this mean for vol traders like us?

Well, I am liking long-dated puts in VXX …

Specifically, the January 2023 20-strike puts for $6 …

I might be a buyer.

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.

Share This Article