I have been closely watching the VIX curve over the last month for signals that this rally could end in the near future. ?Since March 12th, the SPY is about 1.10, a little less than .75%. ?In that same time the VIX has made exactly NO movement. Take a look at the VIX curve from March 12th vs. today:
It is incredible how similar the two curves are. If there is any difference, its that the current curve is slightly flatter, but barely. ?I might look at that as a hint, if there was any difference in the option market, potentially a much higher VIX might point toward some change.
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VIX IV is actually a touch lower than it was last month, despite all the upside open interest. ?Skew is also slightly flatter in VIX options, although only marginally. ?So what does all this mean? ?I think it points toward the market staying slow, grinding higher, and a trip north of 1575.
The Trade:
It’s hard to want to go short premium, or long premium, kind of a tough bind. ?This means a call vertical or butterfly probably makes some sense. ?This also means VXX is probably going to drop another 2 bucks between now and next month.
If you want to learn what all this means- ?This is the type of information we will train you to analyze in our?gold course. ?If you needed help following this trade, you should be in that course. ?Call us at 888 Trade 01 and ask for Taylor or Joel.