The Option Pit VIX Traffic Light is Red: Volatility Is Likely to Drop.
Well, the easy money has been made …
The 17-strike puts I told you to buy for $0.40 are now worth $1.15.
The 16-strike puts I said to buy for $0.25 are worth $0.55
The 15-strike puts I said to buy for $0.10 are now trading $0.25.
So the question now is …
The easy money has been made.
Just about every put that I had in my inventory is up more than 100%.
Whether it’s ProShares Ultra VIX Short Term Futures ETF (Ticker: UVXY) or VIX, owning puts PAID.
But now that the VIX is 15.10, and as I stated …
The EASY money has been made on short volatility.
Is there a short volatility trade that will work?
The answer is YES!
Volatility did get SMASHED on Wednesday, but the curve itself actually widened a touch:
Yesterday, the spread between the cash and the future was about 1.60. Now with the vol crush, it’s about 2.00 points.
Do I still think there is money to be made in November VIX options?
But there are better trades now.
Let’s start with UVXY.
UVXY got destroyed on Wednesday, dropping over 5.50%
But with the curve in a steep contango (futures trading progressively higher over cash), does anyone think the November 14-strike puts for $0.70 seem cheap?
When it comes to VIX itself, I would take a gander at December options.
December futures are trading 4.70 points above the cash.
As November approaches expiration, that is going to put a lot of pressure on VIX.
The 17-strike puts in December are actually CHEAPER than the 17-strike puts in November.
Because one has an underlying of 17.20, the other of 19.77.
December is the place to make money.
There are even better trades than the ones I just laid out.
Want to know what they are?
Your Only Option,