Will the VIX Finally Crash?

Yo Pit Crazies,


Great plays are drawn up first and executed second. 


So, play ball.


Fed Chairman Jerome Powell said on Tuesday that he will raise rates. 


With 5%-plus inflation, he better.


Everyone knows this. (The only question is if he will stay the course.)


That is a known thing — or as close to a sure thing as I’ve seen in some time.


The CDC, meanwhile, just let slip who is dying from the Omicron variant during the COVID pandemic


Hint: it’s people with other health problems.


As sad as that is, it does signal a big shift in messaging.


If the CDC is going to tilt toward back to normal, what does that mean for the market?


Two Big Issues Are Going By the Wayside

I saw this because COVID has dominated the landscape for almost two ears.


The huge move down also precipitated the huge move up.


The Big Gov stimulus has not materialized either.


It is much easier for the market to bounce 10% than to rally from a standstill 10%. 


The bounce/stimmy rally is long in the tooth for the S&P 500. And the easy money Fed is over for big growth stocks like the Invesco QQQ Trust (Ticker: QQQ).


I am not saying SPX cannot rally 10% this, just not this week.


And that is the rub. Volatility goes two ways.


Higher volatility usually means both directions are in play. Right now it appears only one vol catalyst is around and it is not the rocketship we saw in 2021.


That means VIX should trend lower over the coming weeks. Earnings season starts soon and one thing that has remained in the pandemic is that it was good for the biggest companies while leaving Main Street behind.



I am bidding .15 for the VIX Feb.16 16-strike puts and will hedge with junk VXX calls on the upside. The crazy part will be the ratio – 10-to-1 puts to calls.


Volatility Trading Club is where I will work it out.


The Rundown


Option Shopper

Licia Leslie puts on her best trading shoes to find option bargains using market making and charting experience. Generally debit options and spreads with low risk, high reward setups. Short hold times are the norm.


        • Licia put on her shopping shoes with gains in Palantir Technologies Inc. (Ticker: PLTR) calls of 40% plus into the close.


Capitol Gains

Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.


  • I jumped back into Exxon Mobil Corp (Ticker: XOM) call spreads today.


Other stocks currently in the CAPITOL GAINS portfolio:


      • Mandiant Inc. (Ticker: MNDT) long cybersecurity 
      • SPDR Oil and Gas Explorers (Ticker: XOP) long oil
      • Ford Motor Corp (Ticker: F)
      • ExxonMobil Corp (Ticker: XOM)

Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle/calendar trading vehicle. The goal is to teach students the best times to buy options.


      • I am looking for SPDR S&P 500 stock trust ETF (Ticker: SPY) iron condors today as I expect the IV to drop throughout the week.


Power Income Trader:

Power Income Trader is a systematic approach to trading inflation. By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.


Bill’s take on the Fed below:


Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.


      • BMF closed more Intel Corp (Ticker: INTC) calls today up 42% and Uber Technologies Inc. (Ticker: UBER) calls for 50% gains.


Robinhood Trader:
Option Pit CEO Mark Sebastian uses the Robinhood Gamma Radar to find order flow in active MEME  names.

      • Mark is getting snappy with Snapchat Inc. (Ticker: SNAP) calls. And 200% gains so far!

Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session. 


The Pro Roomies looked for some short vol trades and I posted …



I was closing them up 50% by EOD.

Volatility Edge & Volatility Trading Club:

Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use Cboe Volatility Index (Ticker: VIX) future decay to pay for upside iPath Series B S&P 500 short-term VIX futures ETN (Ticker: VXX) and Pro Shares Trust Ultra VIX Short Term Futures ETF (Ticker: UVXY) options.

The Option Pit VIX Light Is Red … and I expect a 16 VIX by Friday.


I expect to ring the put cash register by Friday in VTC trades nos. 275 and 276 this week.


Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!


To Your Trading Success,



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