Yo, Pit Crazies,

Griff is going deep on the Fed Wednesday afternoon. Be there.

Meanwhile, stocks have lost most if not all of their jazz for a rally lately.

The only thing rallying this week has been the VIX, and even that is only around 27.

27!

In any other year, a 27% VIX would be crazy high.

In fact, that’s in the top 25% of the VIX range.

Now it just seems like a walk in the park.

There is so much angst over this week’s Fed meeting I would think it would spill over to the VIX.

Well, looks can be deceiving.

The VIX Oct. 19 27 straddle is $5.05 bid

Recall a straddle is just a call and a put at the spot price of the underlying.

I bring this up because it surprised some of my students in the Volatility Trading Club yesterday.

That same straddle with a month to go in late January was $10.  Sounds nuts but so many more things were unknown back then vis a vis rate hikes, Ukraine, inflation, etc.

In Jan 2022 we were worried things might suck.

Now we KNOW they do.

It is hard for me to believe traders are not pricing in a 20 VIX possibility with 1 month to go from the current straddle.

I keep thinking to myself rate hikes are a foregone conclusion and some grind in stocks is inevitable – but the straddle seems cheap to me as it takes out the tales.

The VIX Oct. 19 23 put and 45 call strangle is just around $1.

I can’t believe that won’t pay.

To Your Trading Success,

AG