The VIX Is Up 19% on the Day
The VIX opened just below 26. That’s a massive 19% jump from Friday’s close.
Right now, the VIX curve is in partial backwardation. That’s a classic indicator for a yellow light, and tells me something very important…
These “wild moves” aren’t done. In fact, they’re just beginning. And it’s possible they’re about to get worse.
Why? Because VIX options expire on Wednesday. And then, the market is closed for Christmas on Friday.
That means the VIX only has one day to trade between December expiration and the holiday.
Look – a yellow light doesn’t necessarily mean that the VIX is going to spike higher. Wild moves can mean a pop or a drop. It doesn’t discriminate when it comes to direction.
Two Mondays ago, we came in and the VIX was 31. By the end of the week, it was down to 19.
That’s evidence that we’re in a market where these moves could go either way. If the market decides it’s done worrying, then the speed at which the volatility gets sucked out will astound you.
On the other end, we could also see an absolute explosion in volatility.
So – how do you play that?
Well, you play to fade. But you do it with a hedge. And you can use VIX, UVXY, or VXX to construct those volatility trades…
All of which I’ll go through during today’s Profit Revolution trading session.
If you want to join my daily trading sessions – and learn how to trade the VIX – then click here now to learn more. These VIX trades are just a piece of what you get as a member.
A Gift for You:
Three Monday Option Trades
- Lululemon Athletica Inc. (Nasdaq:LULU)
Volatility is high in LULU right now. And when IV is high, that’s when we want to sell, not buy. And this retail stock is prime for some premium harvesting right now.
You could buy the June $250 put and sell the June $350 put at the same time, constructing a put credit spread and collecting over two grand in premium.
LULU is about 25% off its all-time high of $485 right now. So I don’t mind owning it at $330 or below.
Really, a credit spread like this is more conservative than a straight call. You’re not betting on the stock going up – you’re just betting on it not dropping. And $2,000 isn’t bad premium to get for that bet.
- Walgreens Boots Alliance Inc. (Nasdaq:WBA)
WBA has some upside in it. It’s about 15% off its 52-week high, and I’m looking to get long as Omicron puts booster vaccines in higher demand. The WBA January $50 calls are only two bucks for a relatively inexpensive bet on WBA making a run higher in the new year.
- AMC Entertainment Holdings Inc. (NYSE:AMC)
Keep an eye on AMC. It opened up this morning – but the minute this thing turns red, it’s going to get absolutely destroyed.
I think this is just a dead cat bounce before AMC heads to sub-$20. We see AMC trade below $28, and we’re looking at an extended sell-off. I’m closely watching the January $25-$15 debit put spread for three bucks to profit off the fall.
Speaking of AMC – check out how my Profit Revolution members did on this trade…
How a Trade “Idea” Returned 400%
I’m bearish on the entertainment stock now. But on Tuesday, I knew this dead cat bounce was coming.
So, I dropped a bonus trade idea – the AMC December 17, 2021 $27 calls for a mere 80 cents.
And on Friday, that call expired a massive 400% higher than where it was on Tuesday.
This trade wasn’t even an official recommendation. It was a bonus idea – something members call a riff, and it’s all part of my goal to overdeliver for Profit Revolution.
When we launched this trading service, we promised one trade a day during a 15-minute trading session. And it was priced as such.
But it’s become so much more than that.
I go live for an hour-plus every day. I give the official “one recommendation a day” – but I also drop a ton of bonus trades, just like this one on AMC. And my members will tell you that it’s one of their favorite parts of the service:
Right now, members are getting so much more than what they paid for. I dedicate the majority of my day to this service – and I want you to benefit.
Want to get my official recommendations AND my riffs every single day? Want to get more bang for your buck?
See you tomorrow,
Founder, Profit Takeover
December 20 2021