Something’s Coming

Mark Sebastian

The Option Pit VIX Traffic Light Is Yellow: Volatility is likely to move Wildly

On a day the S&P 500 moved .2%, the VIX was up .51 points…

That is not supposed to happen.

Volatility has caught a bid:

You can see volatility continued to climb strongly.

So what is going on?

The answer…REITs and the bond market…

Take a look at the REIT index:

It started selling off a few days before the S&P 500…and the REITs look terrible.

High Yield debt is looking weak as well. Yes HYG was up, but relative to investment grade debt…it does not look so hot…

High Yield is vastly underperforming the rest of the bond market…

There is a real estate and junk debt crisis potentially coming our way in the coming weeks.

So what do you do about it…

Easy: Short SPX….Short VIX….

VIX wins if I am wrong….SPX wins BIG if I am right…

How to do it? Have you heard of SPYMaster?

Your Only Option,

Mark Sebastian

VIX Edge

Mark Sebastian

Mark Sebastian is a former member of both the Chicago Board Options Exchange (CBOE) and the American Stock Exchange (AMEX), where he spent years mastering the art of options trading in the most competitive environment imaginable. As Chief Investment Officer at the hedge fund Karman Line Capital, Mark manages sophisticated options strategies for institutional clients. He is the author of two highly regarded books on options trading: ‘The Option Traders Hedge Fund’ and ‘Trading Options for Edge.’ Mark is a frequent guest on major financial networks including CNBC, Fox Business News, Bloomberg, and First Business News, where he provides expert commentary on market volatility and options strategies.

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