The Slick Commodity Trade I’d Make

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

 

Hey Traders,

 

The VIX briefly traded below 15 today, but spent most of the day hovering around 16.

 

It appears that my prediction of the VIX going below 15 by next week has a real good chance of coming true.

 

However, that doesn’t mean there aren’t pockets of volatility (and pockets of opportunity).

 

For example, new regulations going into effect on June 28 could have a massive impact on gold …

 

Option Pit Commodities Expert Bill Griffo and I are going live at 1:00 pm EST today to dig into  how this could shake up the world economy … it’s not too late to register to join us (plus you’ll receive some pretty great attendee bonuses!).

 

Or take oil …

 

Oil is likely heading to $80, and there are some really nice potential options plays on oil.

 

Here is what I would be doing …

 

The Cboe Crude Volatility Index (Ticker: OVX) is the VIX of oil options.

 

It traded as low as 32 last week when oil dropped off.

 

Now that oil has found a lift again, it has begun to rally …

 

 

The good news, the oil VIX is still pretty darn cheap.

 

In addition, Cboe Energy Sector ETF Volatility Index (Ticker: VXXLE), which is the VIX of Energy Select Sector SPDR Fund (Ticker: XLE) options, is also pretty cheap:

 

 

Although, like OVX, it seems to have bottomed out, and found a bid.

 

I have not been subtle about the fact that I love oil stocks.

 

I have a whole list of names I am trading and watching closely.

 

One name is Exxon Mobil (Ticker: XOM) …

 

XOM is now just below its high close since the pandemic began …

 

 

I think it is primed to make a run at the old levels …

 

This would put it over $70 a share …

 

The July 65-strike calls only cost about $1.55-$1.60, and I would be a buyer.

 

But that’s only one trade that I really like right now in oil names.

 

I’ll go through a bunch more in our Option Pit Live Chat on Friday …

 

But you have to be a member of the Trading Legion to hear what I want to trade.

 

Your Only Option,

Mark Sebastian

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