The Option Pit VIX Traffic Light is Red: Volatility Is Likely to Drop.

Hey Traders,

One of the questions I am getting a lot right now is:

“Is it too late to get short VIX?”

I mean, VIX is all the way down to 15, so it must be too late … right?

Wrong.

Here is what to do …

The VIX is now 15.20 as I write this.

Many traders are worried it's too late to trade VIX to the downside …

Here is the good news: it isn’t too late.

Yes, the VIX is 15.20, but where is the November future?

18.60!

That is more than a three-point premium, with only three and a half weeks left to go.

And traders are taking note.

The biggest trade today is the November 16-strike put and December 17-strike put:

Take note of a trader buying about 20,000 of the November 16 puts for $0.33,

These win if the VIX stays where it is today, and can clean up even more if the VIX drops.

And remember, with SKEW starting to soften, the path for a sub-15 VIX is now clear.

Your Only Option,

Mark Sebastian