The Option Pit VIX Light Is Yellow: Volatility Is Going To Move.
Hey Traders,
We are at an inflection point for the market.
Over the last few days, the VIX has backed off.
The move it made is strong enough that we are now at a HUGE crossroads.
Here is what is about to happen…
Since hitting a high earlier in the week of 19.42, the VIX has really backed off.
On Thursday, it closed at 17.28.
With the S&P 500 (Ticker: SPX) closing at a new all-time high, I would like to see us at 15 or 14, but…
Dropping more than 2 points from the highs is a good start.
We are now at a huge inflection point for the VIX.
We are either going to find a bid around 17, and then see the market likely drop.
Or … the Option Pit VIX Traffic Light is going to turn red.
The important day was actually on Wednesday when the SPX dropped … and so did the VIX.
For three days, we have had a pattern of the market generally moving higher, and the VIX dropping:
If today ends with the SPX up and the VIX down again, we are probably going to see the VIX hit 15, and the warning lights will be off.
If we see VIX in the green, whether the SPX is up or down, the yellow light will stay on, and the real move has begun …
If it’s the former, I will pile into some short volatility …
If the latter, I will sit and wait for a move back to 20, and then likely watch the VIX take off, while playing long VIX.
Your Only Option,
Mark Sebastian
