The Option Pit VIX Traffic Light Is Yellow: Volatility is likely to move wildly.
On Tuesday, the S&P 500 took a bit of a dip, falling .46% or 18.95 points to 4,119.17. The VIX got a bid moving up to 17.71
Today, we’ll get the latest CPI number. Let me tell you, something has changed month-over-month.
I have not seen this in a while, but there might be real complacency …
The last time CPI was released, VIX closed 19.09. This time? 17.71 – a nice difference.
Vol has gotten so low – even one-day IV – that the SPX straddle is now predicting a move of less than 1%.
$35 is all CPI is worth right now. Well, I have to tell you. I think that is way too cheap
Sometimes the market has a short memory. Yes, last month CPI was a true nothing-burger. The SPX straddle was was several points more expensive and SPX was slightly cheaper
The straddle was about 40 points, just under 1%. Now, they were right to be low because the SPX did nothing. But will it happen again?
I doubt it.
If the number is in line or near that to the upside, I think we have an inside day.
A bad number could see us tank.
Watch the number. If it’s bad, don’t be afraid to hop on board.
Your Only Option,
Mark Sebastian