One of the big themes from the second half of 2020 was the absence of call buyers.
Over the last 6 months, puts have averaged more volume than calls. Calls averaging about 200k contracts, and puts about 215k.
But NOT Tuesday!
Take a look at this:
Remember, as much as retail loves to set up ‘fade trades’ on the VIX, it is a hedging vehicle.
Historically, call volume exceeds put volume about 1.5 to 1.
Tuesday was the 1st time in a while I have seen calls really get some action.
There were some HUGE VIX trades on Tuesday see below:
Hold on to your horses and look at all this flow for a second. I know it may seem like gibberish but Ill explain here why it matters for you in a second:
- A customer bought 75k of the Feb 50-55 call spreads for .23 cents.
- Another customer bought the March 40-60 call spread paying $1.25
- Yet another customer bought 2 separate call spreads buying the 45-65 and the 50-70 call spread in one big trade 13,251 times each.
- The customer paid .83 cents for the 45-65 and .63 cents for the 50-70 spread.
All of these spreads position for a pop in the VIX AFTER January options expire, which is also when we have a new President enter the fold.
While yesterday was a nice rebound, and the VIX did back off, it was another day where the market moved pretty wildly, going from down 16 premarket to up nearly 35 points at the highs.
This is the beginning of a trend.
Market volatility, up or down, is going to go up.
Your Only Option,
Mark
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