4 year low in VIX

BY ANDREW GIOVINAZZI

December 13, 2023

Yo Pit Crazies,

If you missed my Weekly Profit Cycles presentation last night and are wondering how to make money in a low VIX environment, look no further than right here.

The question you might ask yourself is where can VIX go if it is making 4 year lows. The answer to that is it is only at the top of Zone 1. That means the lower quartile still has room down to a 9 VIX. Yes you heard it here first.

We won’t trade a 9 VIX this week but we could see a low 11’s close if the FOMC meeting holds up the bargain that they have been making. Which means they will stay the course even though the market seems to think they will start to cut. With the US GOV spending $1 Trillion- $2 Trillion a year over their income it is unlikely the Fed will lower anytime soon. They will when they have too. The tailwind post-COVID on the shutdown economy is still too strong.

Is there still room to sell VIX at 12.07 close?

VIX 4 year chart with VIX matching pre-COVID lows.

The answer might surprise you!

VIX options trade on the futures, not the cash

VIX options use the futures price as the underlying. It does not use the cash. Even with VIX at a 12.07, VIX options can move lower.

VIX 3 month chart with 1 day candles

My Weekly Profits Cycles product does not care about market direction, it just has to move somewhere every month. Preferably over 2%. The funny thing is VIX does not even need to move. It can just rot with the speed of gravity. Constant.

VIX 3 month chart with 1 day candles

The underlying for the Jan VIX cycle is 14.40 and that is a full 4 points over the last 30 days SPX realized vol. How does VIX get sub-11? Have another 30 days like the last 30 days and we are there.

Learn how to trade a low VIX environment without selling options. Check out Weekly Profit Cycles here.

To Your Trading Success,