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Mark Sebastian

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

Hey Traders,

On Wednesday I wrote that the S&P 500 straddle was too cheap, and the VIX was too low for CPI…

Check out the range of the S&P 500:

The range for the S&P was almost 2X the previous day’s straddle.

But is the movement done? VIX fell to 16.94, earnings are out, CPI is out … what else could cause the market to move?

Well, there’s PPI on Thursday, that could do it … or the fact that we had that really nasty end of day selling on what was clearly a short squeeze.

And then there’s this:

VVIX blew higher on Wednesday.

Demand for VIX options spiked on Wednesday – post-close, interestingly enough. Downside options blew up – options below 4100 got really big.

I am not saying we are going down or up … but we are going to move.

Buy Strangles and VIX puts. I know I sound like a broken record, but it’s going to continue to work.

Questions about that? Leave a comment below!

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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