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

Hey Traders,

The SPX closed down .41 points after being up almost 1% premarket.

Frankly, the S&P 500 had a really big range if we look at premarket futures moves:

S&P futures were over 4170 and closed below 4120. That’s a nice range and about what VIX was pricing in.

All of this led to the VIX dropping .01 points.

So is this a one off? Is the S&P 500 going to pop off of this move, or is this just a beginning?

Take a look at the VIX flow on Wednesday:

The top 11 trades were all call buys through spread or straight buys.

The April 21 calls in particular are interesting because they represent a very short term outlook on volatility.

Heading into PPI, here is what the S&P 500 is pricing in

27 points … that’s it.

I continue to think that if you manage your deltas on a strangle, it will pay (as it has lately).

Buy premium.

If you don’t know how to do it … join me next Thursday to learn.

Questions about that? Comment below!

Your Only Option,

Mark Sebastian