🚗VIX Closes at a 2 Year Low

[] [The daily rundown of everything happening at Option Pit.]( [.]( MARK-et Open Hey OP Crew, Vol Man here with my weekly analysis. Dang, what a week! Into the close last week, I didn’t see VIX going below 17 until the debt deal was done … But I didn’t expect to be exactly right. What an absolute vol crush! Mark and I closed several positions in VIX and iPath S&P 500 VIX futures Short Term ETN (Ticker: VXX) this week in [OP Mentoring]( and [Trading Desk](. The chart below is a big deal for me. SPX is back to 1 year highs, or close to it, but implied vols are way lower. Many traders got fat off of selling the rips over the last year, and they might get grumpy. The massive vol crush is bullish SPX historically, regardless of what you might think will happen. [ SPX daily price action over the last 12 months, with realized volatility in blue and implied in green, orange on the bottom chart Remember that all traders are selling the vol. That’s a big statistical sample. SPX will make highs by the end of June, 4400 is not a problem. Note the VIX curve below. [ Closing VIX curve, Jun 02, 2023 There’s massive contango values in both Jun and Jul VIX futures. The best trade is long VIX puts and long SPX puts with junk upside calls. VIX contango can pay for tons of options at this point. The drop from the 17 handle in VIX was impressive – no debt crisis, no volatility. [ VIX 30-day chart with 1-minute candles. All 3 vol events recently ended up with positive SPX outcomes. Most of 2023 has been 10 top stocks. There’s a massive amount of value in the rest of the market. There’s also a massive amount of value in the rest of the stocks traded in the SPX. I spent most of Friday rolling puts down to lower strikes in VIX. I think we hit the 13 handle or lower by mid-June and SPX will kiss 4400. Now that rates are higher, with stocks higher, traders have accepted higher rates and stocks can rally. Let’s Go! [/campaigns/org775804783/sitesapi/files/images/774695510/ag (2).png] Pit Report: How to Trade Vol in a $6 Stock We are on to Transocean LTD (Ticker: RIG) in our latest adventure with the Option Pit crew. I have to say – if there is one business that you wouldn’t want to be in … it’s Offshore Oil Drilling. The regulations, technical difficulties, and all the rest to pull oil out of the sea must be daunting. And few companies have been doing it longer than RIG. The first 5 months of the year have produced a near flat performance. The IV has responded in kind, as longer dated premiums have concentrated at the low end of the range. [ 3 and 6 month implied vol with 30 day realized vol for RIG [What is the secret to trading vol in a range?]( - AG Power Moves: Crisis Averted? The debt ceiling circus ran a familiar script and ended in a familiar way. It caused drama, market upheaval, and ended in agreement to push it out. Same script, different data. With just two days to go before Monday’s deadline, President Biden signed H.R. 3746, the “Fiscal Responsibility Act of 2023,” a 99-page bill to prevent default on the Nation’s debt. The President praised the bill for “reducing the deficit, safeguarding Social Security, Medicare, and Medicaid, and fulfilling our sacred obligation to our veterans.” Much of that remains to be seen, but what both sides can agree on was Biden’s statement that "No one got everything they wanted.” I guess that’s the definition of bipartisanship. The House and Senate passed the bill last week, with both houses relying on centrists to get it done. The Senate vote mirrored the split in the House (314-117), with 46 Democrats and 17 Republicans in favor and 31 Republicans along with four Democrats and one independent opposing. It raises the debt limit and shelves the issue until 2025 … after the next presidential election. The nation’s debt limit currently stands at $31.4 trillion, and the Treasury can now borrow more. [I’ll break down what’s in the bill when you click here.]( - Frank Profits In Pumps: IWM Ready to Go, Finally? Quite the rally last week. Tuesday and Wednesday gave us the head fake of a rollover possibility. Didn’t happen. Now it looks like the Russell 2000 (Ticker: RUT) is finally ready to participate. Take a look at the iShares Russell 2000 Index ETF (Ticker: IWM) daily chart: [ It has decisively busted out, to the upside, of that trading range it has been in March 10th. Friday’s close is also well above the 200 day moving average. IWM looks to me like it wants to trade back up to my next resistance level at $188. [If you continue here, I’ll show you how you can play this upside move.]( - Licia OPTION PIT GLOSSARY [( There are plenty of terms in the trading world that need defining. The [Option Pit Glossary]( is here to help. 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