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

On Thursday, the S&P 500 looked like it was going to meander to the 200-day moving average at 3940 and park there …

Then Fed Governor Bostic spoke and the S&P 500 took off…

The S&P 500 went from down on the day to up VERY, VERY fast.

But as hard as the S&P 500 moved … decisions were not made, nothing really changed.

What do I mean by that?

We spent a chunk of the morning below the 200-day moving average and brriefly broke above the 50 dma

To end up about exactly where we were on Tuesday:

On the other hand, VIX got smoked…

VIX futures dropped dramatically as the day wore on:

Clearly the bulls took over on Thursday…

But with the 50-day holding, I am telling you, VIX looks like a buy here.

I would buy a strangle or straddle for next Friday and hedge it by selling VIX futures or buying VIX puts

Your Only Option,

Mark Sebastian