The Option Pit VIX Traffic Light is Red: Volatility Is Likely to Drop.
Leading into Wednesday, the VIX was up four days in a row.
How long can it last?
Is this leading to THE sell off?
The VIX touched into the 18’s on Tuesday …
The S&P 500 (Ticker: SPX) is down again on Wednesday …
But so is the VIX.
It’s the CBOE SKEW Index (Ticker: SKEW), which indicates IV (and demand) for crash-protection puts in the SPX.
After blowing higher over the last week, the SKEW Index is starting to fall again:
SKEW is falling because traders are unloading protection.
It appears that the rally in the VIX might be somewhat short lived:
If this is the peak in the VIX, heading into expiration next week, we might see volatility really fall off.
I am a $0.05 or $0.10 buyer of the VIX 15 puts; I think they could double.
Your Only Option,