Controversial Trade Inside…[Hint: There’s Two!]

The VIX Edge

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Vol Summary

We ended the week with the SPX down about a touch over 50 points on the week.  About a 2% drop on the week.

Yet take a look at the price action of the VIX.  

Almost straight down.  Why? Well remember, the VIX is not the “which-way-is-the-market-going” gauge (that was a mouthful), it is the Fear Gauge.  It is derived from two major components:

  1. How much is the market moving right now
  2. How much MIGHT the SPX move in the future.

The pronounced drop in the VIX clearly comes from the fact that movement is SLOWING.  Realized volatility has dropped from daily moves well over 5%, to daily moves under 3%.  At Friday’s lows, down about 2.5%, the VIX fair value would be 40. Thus, unless we see a serious increase in movement again, VIX is unlikely to pop and more likely to drop. 

In addition, the drop likely means the market thinks that future movement is not going to pick back up to levels we saw recently.  

Does this mean we are at a bottom?  Not necessarily. Remember in 2008-2009 the top of the VIX and the bottom of the market were separated by 4 months.  However, that does likely mean that there could be some value in put selling to get into stocks.  

The bottom might not be in, but the top for VIX probably is.

Looking ahead

The Option Pit Traffic Light

 VIX/SPIKES light is BARELY yellow.

This is because the VIX curve is STILL backward despite the drop in vol

We think we are in a rare spot where the SPX and VIX could drop on the week.  We like a combo of SHORT S&P 500 and SHORT VIX futures.

Your Only Option,

Mark Sebastian

P.S. – Right now if you are seeing this message you are one of my highly valued members.

Every day I’m excited to get up and come work…FOR YOU!

Here’s the thing, as a trader we have to be straight up and to the point.

Get to the edge. Execute. Monitor and move on…

Over the last few weeks changes around here have been huge and I’ve been receiving massive requests for my direct time…to learn from a true master of volatility.

I’m working on something new and special. I’m gonna launch it after Easter. However, before that point I want you to have an exclusive chance at one on one mentoring with me.

Even the great Warren Buffett had a mentor with Benjamin Graham. I was thankful to have my mentor in this game and I want to be able to directly help expedite your learning curve.

This is all about Sharp B.E.T.S and Volatility Edge, but to the next level. 

Its so important to be able to up your game to that of true consistency and mastery and I wanna help get you there as quick as possible.

I literally only have 50 slots available due to the literal time in the day I have to meet with my mentees.

Be prepared for a special offer from me coming out tomorrow, because once I launch in Easter its going up and then its moving up to the retail price of over $15k…which even then is a steal…

Talk soon…

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