$4600 You Heard It Here

[FSTP] [WIC]( $4600, You Heard It Here! Hey OP Crew,  AG’s alter-ego Vol Man here with my weekly analysis. As usual, I will start with last week’s forecast… Last Week: ‘A long Vol Trader does not like to see this chart. A grinding beeline to 12 VIX. The vol futures still move so the opportunity is in VIX future decay, not so much in VIX cash dropping. I expect a crawl to 4600 SPX as the seasonal Santa rally kicks in.”  Well, Well, Well are we ready for ho, ho, ho rally? It is rare to be 100% right on a prediction but there we were. I kept a long delta in[OP Mentoring and the Easy Trade Button]( so that worked out ok. As far as the market rally having legs, keep reading my VIX take on this.  There were very few earnings catalysts this week except Chairman Powell (Ticker: Jpow) saying he could still raise. The Fed is as tight a policy as we have seen in 20 years and stocks keep climbing. I have two opinions on this:  The bond market is now controlling rates so the projected rate cuts are nuts.  The trading action around bond auctions could be more critical vol events.  Jpow wont cut until the Federal Deficit is in check.  $1 Trillion in interest payments are getting pretty big as the return on USGOV spending is approaching 0.  These are opinions based on watching markets for 30+ years. Trading this last week was mostly sector rotation and dumping the Invesco QQQ Trust (Ticker: QQQ) for the Russell 2000 (Ticker: IWM) or Diamonds (Ticker: DIA). IWM is barely up for 2023. Rotation is generally a volatility destroying effect. [fstp] SPX daily price action over the last 30 days [fstp] SPX sigma (Vol per term average) levels over the last 30 days. Sigmas have flatlined much as I predicted last week. I don’t expect them to do much for the next week either. 11% Sigmas in a bull market are ok and keep an eye out for ATM IVs in the single digits Roughly 2 weeks out, SPX Dec12 4630 calls are 9.98% IV are now, crazy as it sounds, relatively expensive.  10-day realized vol is 5.16% or roughly 15 points per day for SPX close to close. This is more like normal bull market action. The 3 years since COVID and massive USGOV stimulus is the exception not the norm. [fstp] VIX dropped and was down .20, in line with my expectations. Vol futures dropped roughly .50 in the short term so VIX puts gained everywhere as did puts in the Vol Products. The VIX Vol curve is in what I would say is an historic “average” set up for a bull market. [fstp]VIX curve, Dec 01 2023 [fstp] Closing VIX curve, Nov 24, 2023 Normal contango has set in so the next big event is around the Fed meeting Dec 12-13. [fstp] VIX 30 day chart with 1 min candles The trade for me is buying longer duration, into January SPX/SPY options and just letting the Santa Rally run. VIX strangles like we run in the [Trading Desk]( make the most sense here because they win in a slow melt of VIX and a parabolic selloff in SPX on debt crisis. It is likely SPX continues the unwind of the QQQ stocks to other stocks. This will press VIX closer to 12, possibly the 11 handle this week. The Dec12-13 Fed meeting will present a gamma buying opportunity once again as it has every cycle in 2023 and 2022.  Weekly Profit Cycles is back to Option Pit and I specialize in this low volatility trading while maintaining market protection via VIX calls or SPY puts. [I will give a webinar on how the strategy works this week.](  If you want to understand Proximity in Washington, check out Frank’s excellent [presentation on future companies and how DC wants to use them.]( Let’s Go! -AG  [Pit Profits] Want to find YOUR winning fit? Give our Customer Care Team a call at [1-888-872-3301](tel:/1-888-872-3301) Monday-Friday from 9 a.m. - 5 p.m. EST. Or email them anytime at [support@optionpit.com](mailto:/support@optionpit.com)  [frep] This ARKK Almost Sank  Don’t forget to [sign up for my webinar]( and learn how to build your 4 figs hedge fund.  In the meantime check out what this fund manager, the famed Cathie Wood or Ark Investments, has done for the year. Like a lot of stocks, Ark Funds Tech and Innovation (Ticker: ARKK) is near highs of the year. After a trip into the low 30s from the $150s in 2021, ARKK has had enough excitement for any fund manager.  I will let Mark and Griff go into the specifics of what ARKK owns, but the options IV are getting pretty low but have recently perked up. [frep] 1 year chart of ARKK with 90 day realized vol in purple and IV60 in yellow The question though, is there any edge in the option pricing for the average investor. [Let’s go see.]( -AG  [logo, fpip, Profits In Pumps] I Called It!  Nice rally on Friday. I called [$4600 on SPXÂ](on Thursday night. The high was $4599.39. The Ishares Russell 2000 Index (Ticker: iWM) has finally decided to participate in the rally. Remember back on November 15th I told you about the head and[ shoulders bottom created in IWM.]( After a period of consolidation, IWM has managed to trade out of the box range. And boy did it break out! Check out the chart: [fpip] As you may remember, the rule of thumb for the head and shoulders target takes IWM back up to $190. Before we go shopping for calls I would like to invite you to [Andrew Giovinazzi’s live event on Wednesday night at 6:00 ET.]( Andrew will demonstrate his strategy that has given him winner after winner in any type of market. You will receive his new ebook just for [signing up](. [Now let’s go option shopping.]( - Licia  [Glossary] There are plenty of terms in the trading world that need explaining. The Option Pit Glossary is here to help. Today's phrase is:  Backwardation -  The condition in a spread where the front-month value is higher than the back-month value. All the Right Options. The Option Pit Team brings more than 150 years of experience to you every day. From the trading pits of Chicago to the world's largest banks to the halls of power in DC -- they've done it all. Now they’re collectively focused on one thing: making YOU a better, more profitable trader. Click the button below to schedule a call with our concierge Customer Care Team to find your best fit today. DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. 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