[VE] This Spread is WIDE

Dear VIX traders,

One thing is clear, while the VIX has slowed…

The Market is EXTREMELY nervous about what is in front of it.

The largest spread in history I’ve ever seen in the VIX is below:

You see last week I mentioned,  “The Spread between VIX and the Sep Future is OUTLANDISHLY big.”

So here’s the thing – 

The September future expires in 26 days.

This includes Labor Day Weekend.

Yet the September future is trading a full 4 point above the cash market:

With this amount of time to expire,  I would consider a 2 point spread to be really…REALLY wide.

So 4 points, with 26 days, and VIX in contango, is a market that might be the widest spread I have ever seen in the history of the VIX.

Here’s the thing, The VIX future has to fall about 15% to meet the cash market in the next 3 weeks.

That is going to create some incredible trades in the VIX contract.

It is also going to drop some significant pressure on the VXX and UVXY over the next couple of weeks.

That said,  when the spread is like this,  who do you think tends to be right: 

The Cash VIX, or the VIX futures traders?

Answer comes tomorrow. In the meantime, email me in what you think!

The VIX Traffic Light is Red. Which means we expect it to go down.

Your Only Option,

Mark Sebastian

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