The Option Pit VIX Traffic Light Is Yellow: Volatility Is Going To Make Wild Moves.
Hey Traders,
While the S&P 500 moved a modest 14 points on Wednesday, the VIX got completely smoked.
The VIX closed at 19.96.
At Monday’s open, it was over 30.
That means it dropped 10 points in about two trading days.
The move in VIX futures has been just as astounding.
Check out the action of the last four trading days:
From backwardation to a pretty steep contango is impressive.
How about my idea from Wednesday’s post?
You COULD have bought the 19 puts for $0.45 on the open …
Heck they were trading there most of the morning.
Where did they close?
$0.85, almost a 100% gain in a day.
But the fun is not over yet.
I think there is way more downside here based on the action.
It appears ARK Innovation ETF (Ticker: ARKK) is NOT going to implode.
The December lull is coming …
Believe it or not, we could see a year-low close within a few trading days of a VIX of 30 …
The 17-strike puts are near $0.20.
Here is a price chart over the last month of the 17-strike puts:
These were over $1.00 for a while.
If VIX tanks, they may get there again…
We put on a trade here on Wednesday in Volatility Edge …
I expect the trade to make 300%.
The crazy thing?
I might have an even better trade in ProShares Ultra VIX Short Term Futures ETF (Ticker: UVXY) I am going to execute soon …
Only one way to find out!
Your Only Option,
Mark Sebastian