VIX Traffic Light

Before I get into today’s traffic light, let’s back it up.

There are four indicators I look at when determining what color our VIX light is that day:

  1. Futures curve
  2. Implied volatility
  3. Realized volatility
  4. S&P correlation

Today, the VIX futures curve is in a contango – a move that generally turns my VIX light red and means that the market is heading higher:

But our other three indicators are telling a different story – one that could send the market haywire over the next several trading days.

What exactly do the other VIX light indicators say? And how can you play volatility to your advantage this week?

IV, realized volatility, and the correlation between the VIX and the S&P? Today, each of these indicators are yellow. And majority rules – so, we’re looking at a yellow VIX light today.
This means that we’re expecting some wild moves in volatility both up and down.

Now, this kind of movement is hard for long-term investors or slow and steady traders. But it’s great for short-term momentum traders – and I’m looking at trading the VIX and UVXY pretty aggressively because of the quick moves the VIX will make.

Mark’s Watchlist

    1. ProShares Ultra VIX Short Term Futures ETF (BATS:UVXY)

You know that today’s VIX light is yellow. That means the VIX is ready to make some big moves – moves that’ll send the leveraged UVXY on a rollercoaster ride. These big moves could send our UVXY put straight into profit territory – so, I’m keeping a close eye on the ETF this week.

Track our put trade right here. The moment it’s time to exit this trade, I’ll send you a text – click here to sign up for text alerts and make sure you’re one of the first to get all important Profit Takeover updates. I’ll also send all exits to your email inbox.

    1. Advanced Micro Devices Inc. (Nasdaq:AMD)

AMD has been on my list for a while, and it’s been a rocketship since last week’s earnings report, up about 15% over the past five days.

As of this morning’s open, shares sat at about $105.93. And I think they could go all the way to $110 from here. Want to play the upside? I’m looking at the August 6 $106 calls for $2.50 – a short-term play that could quickly double, handing out 100% by the end of the trading week.

    1. Transocean Ltd (NYSE:RIG)

RIG has become somewhat of a household Profit Takeover name – that’s how much I’ve talked about the cheap oil stock.

But RIG is one stock that hasn’t participated in oil’s recovery. Does that mean it’s a bad stock? No – quite the opposite. In fact, I see RIG’s lack of movement as an opportunity. Really, the best is yet to come. And I see RIG pushing to $5, $6, maybe even $7.50 by the end of the year – a push it could get after earnings tomorrow.

I’m looking at the August 20 $4 calls for $0.27 for a relatively inexpensive way to profit on that upside.

    1. Tilray Inc. (Nasdaq:TLRY)

TLRY reported good earnings last week. But they weren’t good enough to keep the stock above water – since then, the stock has been fading downward. Today, shares opened at about $14.66. But I see the stock heading down to $13 per share over the next couple of days.

So, I’m looking at the August 20 $14.50 puts for around $1.10 to profit off the downside.

Live Profit Takeover Trading: Tomorrow at 12 ET

I go live every week to break down the market’s biggest moneymaker – and this week’s kicks off tomorrow at noon sharp.

For one hour, I’m going to walk you through volatility, top stocks, and market movers. And then, I’ll tell you exactly how to play those moves for fast cash with a detailed option trade recommendation.

This livestream is completely free for Profit Takeover members. Just click here to sign up for text alerts and get all important event updates.

Then, be sure to tune in right here tomorrow at 12:00 PM ET!

Today’s Impact Money Trade

As the delta variant takes over headlines, big money is flowing into COVID-favorite stock, Pfizer Inc. (NYSE:PFE).

Click To Enlarge

It looks like someone bought a 20,00-contract PFE straddle, purchasing both the September 17 $43 call and the September 17 $43 put.

Essentially, this buyer is looking for a breakout – in either direction. With the straddle trade, they make money to the upside and the downside.

How do I feel? Well, if it’s decided that a COVID “booster shot” is needed, then PFE is going to $50. I’d buy calls on PFE for an easier way to profit on potential upside.

And that’s all for today, folks. Be sure to tune in to our live trading session tomorrow at noon!

See you then,

Mark Sebastian


Leave a Reply

Your email address will not be published.