The Option Pit VIX Light Is Red, And Volatility Is Likely To Drop.
Hey Traders,
Have you signed up for our must-see event this Thursday? Our Option Pit Commodities Pro Bill Griffo will be going LIVE this Thursday at 12pm EST to give the details on a monumental shift in the monetary system that will result from new regulations that go into effect THIS MONTH.
The dollar may be in dire danger as we stare down the barrel of a digital currency arms race …
Will you be caught unprepared … or will you be ready to profit?
Don’t miss this event! Click here to register.
Back to the VIX …
Coming out of a weekend, we often expect the VIX to be up.
And on Monday, it was … for most of the day …
But then as the market rallied higher to end the day nearly unchanged, the VIX also managed to get to even on the day.
There is a lot to unpack about the VIX trading Monday.
And while volume was slow, there were a few clear signs of what the VIX is doing next.
Here is what I saw.
Coming out of a long weekend last week, for the VIX to close unchanged, effectively means it went down.
I explained why in this post that I highlighted last week.
But that is not the only interesting tidbit.
The VIX has now closed below 17 for two days in a row.
It did this once in April …
And that is the ONLY other time since the start of the pandemic:
Additionally, the VIX closed flat (essentially down) on a day where the S&P 500 (Ticker: SPX) was actually down on the day.
Yes, it was only down three points, but lately any down move in the S&P 500 has meant a VIX rally …
Not this time.
SPX movement has collapsed in the last 10 days:
It is now approaching lows for the year, and who knows? It could go lower.
So what does all this mean?
Add in all those July puts I discussed in Monday’s post, and I think we have a recipe for a full-scale VIX collapse.
I’m calling it now … I think we will see the VIX trade near 15 this week.
June expiration next Wednesday is set to be the lowest since the pandemic, unless a shoe NO ONE currently sees coming drops …
I would be playing VIX June 15, 16, and 17-strike puts leading into Friday.
Your Only Option
Mark Sebastian