Yo, Pit Crazies,

The S&P 500 sell-off – when does it??

It sure felt like it yesterday.

Nord Stream 1 pipeline cutoff …

Nvidia Inc (Ticker: NVDA) can’t sell chips to China …

Day 5 of the sell-off pushed the S&P down to 3900.

Then like a phoenix out of the ashes …

SPX rallied and the CBOE Volatility Index (Ticker: VIX) closed red on the day.

Is there anything else to the story?

The answer is … Yes!

Volatility Totally Sold Off in the SPX Sept. cycle

If you notice above, Vol Man is looking at the drop in implied volatility as well as the rally in SPX.  

Note how IV dropped briskly as SPX rallied. The two are negatively correlated 80% of the time.  When IV sells off, that usually means the rally will hold for the day.

I was riding some decent gains in put spreads in SPYMaster and did not close them.

I figure if SPY rallies a bunch more, VIX will drop and the positions will still make money.

The SPY put spreads are still green and today’s NFP number might give traders a shiver.

If you want to learn how to trade like this, sign up for SPYMaster while there is still time – and get 20% off as part of our pre-Labor Day Sale when you call 1-888-872-3301 by 5 p.m. today.

The Rundown

OP Mentoring

I closed an Apple Inc (Ticker: AAPL) put butterfly for a 13% gain.

Option Shopper

Licia with a timely close on the ProShares UltraPro short S&P500 ETF (Ticker: SPXU) Sep09 calls for 57% gain. This is a nice inverse SPX product with cheap entry points.

Nitro Trader

Bad news out of China sent shares of Tesla Inc (Ticker: TSLA) tumbling, so Mark closed his put fly for 103% gain.

To Your Trading Success,

AG