The Option Pit VIX Traffic Light is Yellow: Volatility Is Likely To Move Wildly.
Hey Traders,
The last five trading days have been volatile, but it has been especially volatile during a specific time of day …
Will this pattern continue on Friday and into Monday?
If it does, there is a lot of money to be made.
The market has had huge days for the last five trading sessions.
Last Friday, the S&P 500 (Ticker: SPX) moved more than 2%. On Monday, we saw the same thing.
On Tuesday and Thursday, the market climbed another 2% …
Then on Thursday, the market tanked almost 3%!
But the crazy thing is when these moves are happening, a huge part of them is occurring during the final 30 minutes of trading.
Check out this five-day tick chart of the SPX:
What I want you to notice is the end-of-day ramps but up and down that seem to happen into the close.
What’s happening?
This is algo trading pushing the close.
When you spot it, there can be really good money to be made in index options.
Last Friday in our Option Pit Pro trading room, we bought the SPX January 28th 4400-4425 call 1-by-2 for a little over $1.00.
Where did that close?
The SPX 4400 calls settled for 31.85, and the two 4425 calls settled for 6.85,
The 1-by-2 call spread went out for 18.15!
A cool 1,815% winner trading the close.
Similar trades could be made in ProShares Ultra VIX Short Term Futures ETF (Ticker: UVXY) going into the close, as the ETF dropped 1.45 in the final hour of trading:
In fact, UVXY started to drop sharply BEFORE the SPX started to move.
I would not be surprised to see more trades like this in the days ahead.
I will be watching, and trading them when I find them …
If you want to join us in the Pro room, or find a trading program that is right for you, so you can also take advantage of these huge profit opportunities … give us a call at 888-872-3301.
Your Only Option,
Mark Sebastian