BY ANDREW GIOVINAZZI
September 12, 2024
Yo Pit Crazies,
For all those wondering about how the market would react to a just hot CPI number, the answer is a 150 point range in SPX. NOTE THAT TRADERS ARE NOT SCARED ENOUGH TO PUSH SPX BELOW 5400.
Sorry but we need really bad news for that. I had some Two-Way Trades going that gave me a nice chance to exit some SPY put spreads and VXX call spreads this morning. Once they stopped paying, I started exiting. With this market, if we are not going down we are going up.
Two week SPX chart with 1 min candles
Another thing happened today that was confirming the SPX rally and that was a VIX collapse to a 10 day low. A VIX drop like that is the market saying it knows what is up. The only reason we are not lower in VIX is because the range was 3% or a 36 VIX. The drop we did get was massive.
VIX 30 day chart with 1 min candles
What does that all mean going into the FOMC meeting next week where everyone and their brother is expecting a .25% rate cut?
Funny you should ask
VIX closed in a new Zone for the week
Why do I care that VIX changes Zones from 3 to 2? That is a change in sentiment with a real value. Just earlier this morning traders thought the 30 day range was $240 in SPX, now it is $185. That is just the change in the ATM straddle 30 days out. So traders are saying around 5400 is not enough, they won’t pay for more range.
Generally a move down into the top of the Zone should bring us back to the lows which is around 14.5% VIX. If the Fed cuts .25%, that is what I expect and have some Two-Way Trades on to that effect.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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