We’re Dealing With A Spike, Not A Swell

The Option Pit VIX Light Is Red, And Volatility Will Drop.

 

Hey Traders,

 

Well, volatility has certainly calmed down …

 

But as you ought to know by now, that doesn’t mean we can’t keep trading it …

 

In fact, I’ll be revealing three volatility trades TOMORROW, Thursday, June 24 at 1:00 pm EST, during a live special event …

 

Option Pit Commodities Expert Bill Griffo has been preaching for WEEKS about the monumental changes we’re about to watch unfold, as new regulations go into place on June 28 that will force $40 billion in gold derivatives to unwind …

 

Tomorrow he’s going live at 1:00 p.m. EST with his final warning … and some insight on how you can use this to profit!

 

I’ll be joining him (with those three volatility trades) so be sure you’re registered …

 

On Friday, we saw the VIX explode over 20 …

 

Within 2 days, it’s all fizzled…

 

Now, we have returned to a VIX that is sub-17…

 

How did this happen, and what does this mean for traders?

 

Like I said, on Friday, the VIX blew higher.

 

Over the course of a couple of days, the VIX slowly rallied from 16 … to over 17 …

 

Then on Friday, it exploded over 20 …

 

But here is the crazy thing … Friday was really just a blip.

 

Friday did not matter …

 

Take a look at the curve of VIX futures LAST Tuesday, June 15, compared to the VIX futures curve from this Tuesday, June 22nd, and Friday, June 18 …

 

Over the course of a week, the VIX curve went from a STEEP contango (futures prices trading over spot prices), to almost flat … to an even STEEPER contango …

 

So, what does this mean?

 

Last Friday was a one-off.

 

When we talk about “spike vs a swell,” what we are looking at right now appears to be a classic spike, NOT a swell.

 

Remember, a swell is a slowly developing increase in volatility that eventually blows higher …

 

A spike is a one to two day pop that dies quickly, and leads to new highs in the S&P 500 (Ticker: SPX) …

 

Speaking of, what happened on Tuesday in the S&P 500???

 

We broke the all time high intraday, and ended up closing just a touch below that price. I think over the next two weeks we are going to see the S&P 500 keep running. 

 

We may have one more of these spike events, but in the end, VIX is going to 15 …

 

This means ProShares Ultra VIX Short-Term Futures ETN (Ticker: UVXY) could fall to 26, and iPath Series B S&P 500 VIX Short-Term Futures ETN (Ticker: VXX) is going lower too.

 

The simplest trade, as I see it though, is simply to buy the VIX 17-strike puts for about $1.00.

 

I think those are going to have a hard time losing.

 

Your Only Option

 

Mark

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