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Mark It Down: VIX Will Jump Over 30

Yo Pit Crazies,


The market is off to a dismal start in 2022 – but that doesn’t mean you shouldn’t be profiting.


In fact, that’s one big reason why Option Pit is here … to provide the support, education and community when the going gets tough for the outside trading world – so you can continue to stack gains.


Always remember … you’re not alone!


Our team of pros have decades of experience and our growing community of retail traders are a valuable resource for idea flow, as well.


With all that in mind, look for two events this week.; 


  • All Hands On Deck Monday, Jan. 24, Noon EST: It’s getting ugly out there. The VIX is more than 60% in the past month – and Wednesday’s Fed event is a mystery wrapped in a box covered in question marks. Guess what all this uncertainty means for you? That’s right, opportunity. Here’s your direct access into the room.


  • Bill Griffo LIVE Fed Event Wednesday, Jan. 26, 3 p.m. EST: Griff seems to profit no matter what moves the Fed makes. And after 40 years of trading it’s like he knows what the central bank is going to do. Well … he does! Join Griff as he translates J-Pow’s proclamations, reveals the sector ready to explode in 2022 and shares his top trades to make right now. No cost for OP Pro and Power Income Trader members. All others can register here.


Think of the current situation as Big Money Vol meets the VIX.


VIX is in the “danger zone,” which at Option Pit is Zone 4, 24 or higher. 


There is a how, what and why to Zone 4


And, of course, a trade.


The Big Why is a dose of uncertainty from last Wednesday.


Let’s get on it.


The President’s Remarks Did Not Calm Markets


After 30 years of trading options, I can say nothing moves vol faster than a surprise government action.


We just went through four years of Trump and China tariff volatility. Remember that?


The new vol is coming from a surprise nod to an “incursion” and a more aggressive Fed policy outlined during President Biden’s press conference last week.


Those were surprises – and the stock market did not like them when it was a more “Uncle Joe” approach to things.


Looking under the hood of stocks, many higher fliers in 2021 are already down 50 to 70% from highs.


I mentioned this throughout the week with Ark Funds.


The Trading Legion is running a nice win in Ark Funds Innovation and Tech (Ticker: ARKK) put flies and a call.


The selloff is now hitting the big caps like Nvidia Inc. (Ticker: NVDA) and Apple Inc. (Ticker: AAPL). 


One-day VIX chart with IV on the bottom.


Vol Man is noticing the bid for VIX options, but it is not a straight-up spike. I think the when and how comes this week while waiting for the Fed to speak and in its aftermath.


I want to ride that wave.


In the VTC I posted some VXX call butterflies as an upside vehicle to ride.  Even short-term flies for this week could work out well.


Get ready for a bumpy week!


The Rundown


Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

  • I added some Ford Motor Co (Ticker: F) put flies this week as a call hedge.


Power Income Trader:

Power Income Trader is a systematic approach to trading inflation.  By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.



Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session. 


The Pro Room is looking at the Bitcoin freefall as it has plenty of room to go and Mark posted a killer 7x Day Trade:

Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.

 

Mark kept the hot trade going in Pacific Biosciences Inc (Ticker: PACB) puts that are up 100%.


Volatility Edge & Volatility Trading Club:

Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use VIX future decay to pay for upside Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.

The Option Pit VIX Light Is About to Go Yellow. The VIX curve is in a slight backwardation, however, the front expiring this week might get a pop.


I have VTC Trade No. 278 with an 8-point wide call butterfly in VXX and cheap Feb. VIX puts for a hedge. I have No. 277 for a 10% win and the VXX puts for a credit. No. 277 was initially a short vol trade but it made money anyway.


Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!


To Your Trading Success,


AG

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