Welcome from West Palm Beach! We are chilling in the shadows of Mar-a-Lago and the breezy tropical winds are making it quite pleasant and 70 degrees warmer than at home.

What also is chilling is the VIX curve. There is a remarkable lack of information on what is going on in Iran. Some news snippets but VIX moved from 27 yesterday morning to 20 today. We are now below Monday’s close.

5 Day VIX chart

The VIX curve is also back into contango after spending Monday and Tuesday backwards for reasons of a new Gulf War happening in real time. A contango curve just represents lower volatility in the short term but more later. That is the normal assumption.

Today’s VIX future curve

Compare this curve with yesterday’s close.

The red line is the VIX cash index holding way above all the futures. That is the market seriously unsettled about what is to come. And what came is some order in the Persian Gulf. For now.

Yesterday’s VIX curve in purple, today in blue, VIX index in red

Once again, traders are betting on a good outcome as we get back to 6900 SPX from 6700 and lower yesterday. I did close most of, if not all, of my VIX long trades yesterday except whatever I paired with market longs at the close. I don’t think we are out of the woods yet but getting there.

That Peace Dividend might come quicker than we think.

To Your Trading Success,

AG