The Option Pit VIX Light Is Yellow, and there will be big VIX moves, though direction isn’t certain.
There has been a huge range in the VIX over the last five days
Check out these highs and lows …
Even Marvin Gaye and Tammi Terrell would have second thoughts after seeing this.
In the last five trading days, VIX went above 31 and briefly broke below 23.
So what is the next move?
Are we heading back to 30 — or are we finally going to see the other side of 21?
Most importantly, where is our next edge?
Yesterday, a trader made a huge low-dollar bet that the VIX is going lower.
Check out the March 21s that expire on the 17th:
In one trade, a customer bought more than 92,000 of the VIX March 21 puts paying .13.
This COULD be a close, but most of the paper in March has been customers buying … so I think this was an opening trade.
If the open interest — the number of outstanding contracts — is down tomorrow, I’ll know I was wrong.
But what I see is a customer is putting up almost $1.2 million that the VIX is going to go below 21 by expiration.
I have seen bigger bets — but this is pretty big AND short-dated, meaning he or she is expecting the drop to happen very soon.
I tend to agree with him or her, especially if the QQQ — an ETF that tracks the Nasdaq 100 Index — can keep its bullish momentum going and run back to 320-325.
I like the March 20 puts for .05.
They are low-risk (they cost .05) and they could easily pop to .25 if the VIX takes a drop.
And, heck, these could be worth over 1.00 if the VIX rally takes a nosedive.
The Option Pit VIX Light Is Yellow, and there will be big VIX moves, potentially in either direction.
Your Only Option,