The VIX is selling off handily today. I think it is going to threaten 40 at least until the fed decision come out.
However, that is not the interesting story in volatility surrounding the VIX. While traders are dumping S&P volatility in droves, there is an all out race to sell VIX option premium. The VIX is still higher than it closed on Friday and has given up less than half of yesterday's pop. Yet, VIX option implied volatility is now lower than it was on last Thursday.
Traders that had the stones to sell premium in VIX (in a smart way) are being paid handsomely today. Especially if one was able to sell in the fine 20 minutes of trading, when the market began to capitulate, it fully (temporarily) capitulated after the bell when S&P 500 futures sold off into 1190’s.
Is this a signal for a bottom? I don’t know. But, for those looking to insure, it is now only insanely priced to do so instead of super duper insanely priced. And for those that think that was the bottom, S&P and VIX options still have a ton of juice. If you have the marbles...Have at it. One trade that might make sense, if one is in cash, is to start looking at short puts in SPX or short calls in VIX.
I’ll be back with full blog after the bell, where I will give the State of Volatility in the SPX. Don't forget to check out our Volatiilty Course while you are here.
