I have two stats for you.
- The S&P 500 was down 9.26, or .22%
- The VIX was up .31 to 24.11
What the heck is the VIX doing expecting 1.5% per day with SPX not moving?
Are we waiting for news?
Are the Russians going to upend the global energy industry like they almost did in April?
Or …
Am I waiting for the Federal Reserve Chairman to tell everyone what he is already doing from his rarefied perch in Jackson Hole? Basically, Inflation is out of control and we will raise at least 75 basis points.
The issue is the market cannot decide which calamity will befall us so it defaults to DEFCON 4, a 24+ VIX.
Zone 4 Is the Highest VIX quartile
Over the past 20 years, VIX spends 75% of its time below 24.
We have been in an extended vol regime since COVID (and most government interventions have unintentionally made things works).
If they made it better, VIX would be 14 and things would be peachy.
But they did not, and things are not.
That Friday Vol bulge is looking for a 70 point SPX move.
My prediction is Fed Chair JPow will be an inflation hawk until there is a reason not to be.
4000 or 4250 Friday for SPX. Whoa, Nelly!
4250 SPX and VIX is back to 21.
I will play it that way in SPYMaster!
The Rundown
Nitro Trader
Mark and I came up with the pair of the week with a long calendar in Exxon Mobil Inc (Ticker: XOM) and short delta put butterfly in Ark Funds Innovation and Tech ETF (Ticker: ARKK).
– XOM 7 Aug26/Sep09 97 call calendar closed for a 81% gain
– ARKK 7 Sep16 46/40/34 put butterfly closed for a 106% gain
To Your Trading Success,
AG