VIX Futures Say One Off

05/28/2015 8:00 am EST


Mark Sebastian

Founder, Option Pit LLC

Option trader Mark Sebastian, of, examines the VIX movement on Tuesday but is fairly confident there’s little chance of this being an issue and he highlights how he came to this conclusion. Plus, Mark shares his outlook moving forward and the trade he prefers instead.

The VIX was up a nice amount Tuesday. But I am pretty sure that there is little chance we are going to have a serious issue. Why? Because of the VIX-VX spread. The VIX was up 2 points, the VIX future in June, was up only .50.  It didn’t even sneeze when the SPX sold off down near 30 points Tuesday, topping off at up about .65 on the day.

Click to Enlarge

Take a look at the above: there is no movement.  My guess, we are higher than where we started by the end of the week.

The Lesson:

The only percentage move in VIX belongs in the futures...not in the cash.

The Trade:

I like owning calls in SPY.

By Mark Sebastian, Blogger and Contributor,

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