Why Won’t the VIX Break Out?

Mark Sebastian

The Option Pit VIX Traffic Light Is Green: Volatility is likely to go up or stay high.

Hey Traders,

The Option Pit VIX Traffic Light is green …

And while the VIX is moderately higher …

It has not really broken out the way we might expect.

What is going on, and what should we expect next?

Well, first let’s take a look at the S&P 500 (Ticker: SPX) versus the VIX.

Yes, VIX is up … but while the SPX is making new lows, VIX is NOT making new highs!

What does this tell me?

People are not panicking yet … this is an extremely orderly sell-off.

We are not getting the heavy hedging we would usually see if people were panicking …

Therefore I expect that we are going to go lower.

I still think we may see the other side of 4,000 in the SPX … maybe even 3,000.

And when the VIX breaks higher … it is going to really break out higher.

I still expect to see a 40 VIX before this is all said and done …

Your Only Option,

Mark Sebastian

VIX Edge

Mark Sebastian

Mark Sebastian is a former member of both the Chicago Board Options Exchange (CBOE) and the American Stock Exchange (AMEX), where he spent years mastering the art of options trading in the most competitive environment imaginable. As Chief Investment Officer at the hedge fund Karman Line Capital, Mark manages sophisticated options strategies for institutional clients. He is the author of two highly regarded books on options trading: ‘The Option Traders Hedge Fund’ and ‘Trading Options for Edge.’ Mark is a frequent guest on major financial networks including CNBC, Fox Business News, Bloomberg, and First Business News, where he provides expert commentary on market volatility and options strategies.

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