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VIX Closes in the 15 Handle

Yo Pit Crazies,

An odd confluence of factors is pushing VIX down and the S&P 500 up. 

This is not good for metals (and inflation-sensitive stocks in general), as the spending binge in Washington DC has hit a snag.

But clearly the market is moving past the Delta variant to some degree.

And there is even talk of the taper being acceptable.

Elsewhere, we hosted our Capitol Gains webinar yesterday and I managed to pull it off under a COVID fog — yes, the ‘rona found me.

The ‘Vid

I am still somewhat foggy, mostly a sore throat and lack of sleep …

But the VIX does not sleep!

Or maybe it does, a little.

The index traded the 15 handle yesterday and may go even lower.

Why?  Because all of the stuff that mattered two weeks ago does not matter as much now.

      • Delta Variant is a media event (even as I have Covid-19!).
      • The taper by the Fed is inevitable.
      • The Washington DC spending binge is not a lock anymore.

Remember that VIX holds the sentiment of all known info and that is filtered through the S&P 500 (SPX).  The SPX 30-day, 25-delta put option is losing implied volatility in .05 increments. It’s not a mass selloff for volatility, but it is consistent.

 SPX Sept. 10 4335 puts IV daily close.

The Lesson: Consistent VIX drops are usually bullish. Crazy as that sounds, SPX 4500 is only 40 pts away.

Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

We kicked off Capitol Gains this week and now access to new subscribers is shut down!

The closed trade log is here.

Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session. 

The Pro Room used the rally yesterday to take profits:

      • Jason F. won again, selling 50% of his UVXY Aug. 13 23.5-strike puts for $1.01

Robinhood Trader:
Option Pit CEO Mark Sebastian uses the Robinhood Gamma Radar to find order flow in active names.

      • Mark still hitting Robinhood Trader: UVXY sell-to-close 1/2 Aug. 13 23.5-strike puts at $.96 for and a 100%+ win

Volatility Edge & Volatility Trading Club:

Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use VIX future decay to pay for upside VIX, VXX and UVXY options.

The Option Pit VIX Red, VVIX moving DOWN A BIT to 117.  I like a number below 100 on VVIX, which is usually uber-bullish SPX.

Mark closed more VIX puts on the VIX Aug. 18 18-strike puts at $1.50  for a 90% gain there. It was good position management as he sold the QQQ put hedge for a 50% gain last week.

Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!

To Your Trading Success,

AG

 

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