Yo Pit Crazies!

Here’s how to actually measure market fear: watch VIX calls AND at-the-money SPY calls simultaneously. When both spike together, you’re seeing real terror. When VIX calls hit weekly highs but SPY calls stay calm, someone’s about to blink.

Today, someone blinked hard.

We had two completely different markets today – like Tale of Two Cities during the French Revolution. Morning felt like Paris during the Reign of Terror. By afternoon, we were chilling in London’s sanctuary.

The Morning Terror: Real Fear Showed Up

Stocks opened weak and VIX calls hit weekly highs. I was tracking both VIX December 24 calls and at-the-money SPY calls – both spiking together signals genuine panic, not just VIX manipulation.

Here’s the thing most traders miss: VIX can spike while VIX futures stay flat, making your VIX trades worthless. But when you see both VIX calls AND SPY calls rising together, that’s legitimate fear pricing. Use this combo to avoid VIX headfakes.

The Fed Got the Memo (Literally)

Then around 11 AM, everything flipped.  

Some Fed governor in Chile suddenly went soft on rates, and I’m convinced the Plunge Protection Team made that call happen. 

Think about it – market’s tanking, VIX exploding, and magically a Fed official thousands of miles away decides to hint at December rate cuts?

December rate cut odds jumped from 30% (my “not happening” zone) to 75% in four hours. 

That’s not organic market movement – that’s coordination.

The Real Problem Nobody’s Talking About

Here’s what’s actually driving this volatility: Bitcoin forced liquidations bleeding into stocks. Congress kept COVID-era spending levels and called it an accomplishment. We’re still burning money like 2020 never ended.

As amateur Roman historians (and let’s face it, most middle-aged traders are), we know Rome’s biggest mistake: entitlements grew bigger than the empire could support. They outsourced everything until they couldn’t maintain control.

Sound familiar?

The 90s playbook worked – prudent spending created one of the most prosperous five-year runs in history. But nobody wants to use it.

Next Week’s Trade Setup

VIX closed just under 24 (barely), and traders are spooked heading into the weekend. My read: we’re probably higher than lower on SPY next week, but volatility stays elevated.

Your Action Plan:

• Track VIX calls + at-the-money SPY calls together
• When both spike simultaneously, expect either Fed intervention or real breakdown
• Use any Fed-driven rallies to position for continued chop

The market’s telling us something about forced selling pressure. Whether it’s crypto liquidations or something bigger, this isn’t over.

If you want to learn how to trade this volatility, check out the largest giveaway Mark is offering – $1,000 off any Option Pit subscription.

To Your Trading Success,

AG