The VIX Curve is SUPER, SUPER FLAT

If you don’t know what a planking exercise looks like, here is a picture:

Basically, the person exercising tries to make their body as flat as possible.

So the VIX is, in fact, planking:

From February through September there is almost NO difference in futures price.

This is not unusual when we are in a backwardation (near-dated futures are more expensive than long-dated futures).

But it is rare when there is a full 2-point premium between the first month and the second month out.

I see a TON of opportunity in this curve …

And a short futures spread is likely to win. 

Based on the curve, I want to sell April and buy May.

I also think, based on the curve, that February is a huge short.

In the free trade I put out to clients that emailed me back saying ‘SHOOT” we have seen a nice easy winner…

Even with the crazy moves, it’s up a quarter.

I think February is going to fall.

Like planking, it is EXTREMELY difficult for futures to fight gravity (the VIX cash in this case).

I would be a buyer of the Feb 23-20 put spread for about 1.30. I am pretty certain that is going to pay out nicely.

The VIX Light is Red … and that tells me this is likely to win.

Your Only Option,

Mark Sebastian


DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy.DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.