VIX is Unimpressed

03/27/2015 8:00 am EST

Focus: OPTIONS

Mark Sebastian

Founder, OptionPit.com

Option trader Mark Sebastian, of OptionPit.com, reviews the recent price action of the SPY and the VIX, sees no reason to panic, and even suggests—if he were a betting man—that he’d say that the smart money was probably selling premium into this selloff.

In the last four days, the market has given away about 45 points, a nice move north of 1% a day in terms of movement. Yet, take a look at the price action of SPY and VIX over the last six days (since Thursday of last week).

chart
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As I review the movement in VIX relative to the SPY, I see no panic, in fact, if I were a betting man, I would say that the smart money was probably selling premium into this selloff.  It could be because it was already hedged, who knows?

The Lesson:

It’s not up or down in VIX, it’s up or down and magnitude in VIX.

The Trade:

I think the market has a strong rebound in the next day or two.

By Mark Sebastian, Blogger and Contributor, OptionPit.com

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