You CAN Predict “Vol!”

My replay for “How I Nearly Doubled My Account…in JUST 3 weeks,” is up! Since we had a recording error I’m keeping my special offer up for you so you can see it. I wont keep it long… Check out the replay here!

Hey traders,

What if I told you that there is a “season” to volatility…

Every.single.week!

You see coming out of a weekend, we expect the VIX to be up.

This is called Weekend Effect.

It’s essentially an adjustment for the fact that options decay 24/7 but only trade 5 days a week.

Coming out of Thanksgiving week — when we only trade 3 ½ days — we would expect the VIX to actually be up a little bit MORE than normal.

On a day the S&P 500 is down, we expect the VIX to be up. This is partially because of the way the VIX calculates itself…

But also because down days tend to bring demand for S&P 500 put options.  Because,  on down days,  people tend to want to buy puts.

Yet, here we are after the close on Monday, when the S&P 500 was down over 1% at one point…

And the VIX closed down .27

The VIX is now only .75 points away from breaking 20.(A 20 on the VIX is usually a sign markets are getting to “calm”)

What is going on?

The answer is the market is calming down, because volatility is being sucked out of the market…

The HUGE swings,  aren’t so huge anymore…except on rallys.

And, frankly, no one is selling these ‘sell offs.’

Basically, with the VIX over 20, the market thinks premiums on options are high.

The fact is … they are.

The VIX can stay above 20 for a long time … but not forever.

We may be heading for a sub-20 VIX this week … for the first time since Feb. 21.

That’s almost 10 MONTHS:

Don’t be surprised by this price action.

There are A LOT more marginal down days for the S&P 500 that will bring down days for the VIX coming in December.

The VIX light is SCREAMING RED.

Your Only Option,

Mark Sebastian

Oh by the way – My elite trading service “Volatility Edge,” has been killing it on this VIX light red run! You can get in here.

  • DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees do not offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. 
  • Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Option Pit LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute a solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy.
  • To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Use caution when entering any option transaction and it is recommended you consult with your financial advisor for investment, legal or tax advice relating to options transactions.
Mark Sebastian

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.

Share This Article

About the Author

Mark Sebastian

Mark Sebastian

Former CBOE floor trader and CIO at Karman Line Capital. Author of ‘The Option Traders Hedge Fund’ with over 30 years of options trading experience.

Popular Posts

Categories

Stay Updated

Subscribe to our newsletter for daily trading insights

Upcoming Events

FOMC Meeting

2:00 PM EST

Earnings Season Begins

Pre-market

Options Expiration

Market Close

NFP Report

8:30 AM EST