The Big VIX Opportunity I’m Trading

The Option Pit VIX Light Is Red, Volatility Will Drop.

Hey Traders,

The VIX is down 0.35, which is HUGE when we come off a weekend (remember: the weekend effect!).  

Yet … despite that, we are not seeing VIX futures fall.

Something big is about to happen, and I think it could mean the opportunity to make some decent profits in the near future.

I will walk you through what is happening, and how I am going to trade it.

Ahead of The Curve

The VIX futures curve is incredibly expensive.

While the VIX is threatening to break into the 15s …

The September future is trading near 19!

We are seeing little-to-no drop in ProShares Ultra VIX Short Term Futures ETF (Ticker: UVXY) and iPath Series B S&P 500 VIX Short-Term Futures ETN (Ticker: VXX) because of this.

And VIX options are dying today with the VVIX — the VIX of the VIX — dropping.

We have the ADP National Employment Report on Wednesday, and Non-Farm Payrolls on Friday.

We also have a long weekend.

The long weekend combined with Non-Farms coming out could wallop the VIX.

With only six full trading days until expiration after Friday, the pressure on VIX futures is going to be immense.

We could see a day where the VIX is flattish or down small, and the VIX futures get CRUSHED.

The VIX September 17-strike puts (we are long these in my Volatility Edge program — call 888-872-3301 to find out more, and tell them you are from VIX Edge for a discount) are about $0.45. They are a steal at that price, as they are in the money by about $1.00 intrinsically.

As we get closer to expiration, that $2.80 spread between VIX cash and VIX September futures needs to collapse.

I suspect it will be near $1.40 by Friday, and about $1.00 (or less) the following Friday.

If VIX does not pop, that means VIX futures have to drop.

Your Only Option,

Mark Sebastian

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