Expiration Just Shot the VIX Higher

Most options contracts expire on Fridays. You’ve got your weekly Friday expirations, and your monthlies – options that expire on the third Friday of the month.

But options on my #1 favorite indicator, the VIX, expire on Wednesdays. And that’s exactly what happened at this morning’s opening bell.

I tend to pay special attention to VIX options expiry. Why? Well, the last couple days into expiration can really swing things on the VIX.

Friday’s highs were around 15.5. I thought that the 15 puts on the VIX had a good shot at expiring in-the-money (ITM).

Remember, a put is ITM if the strike price is above the price of the underlying. Meaning if the VIX was below 15, then those August 15 puts would’ve been ITM. And the buyers of those puts would’ve most likely profited.

But that’s not what we saw. Yesterday, in fact, the 19 calls were ITM for a short period of time!

And after today’s expiration, the VIX settled around 18.58 – almost 20% higher than Friday’s highs.

All in all, this is just slightly lower than where the VIX expired last month. And it shouldn’t have an effect on volatility longer-term. But it’s clearly a huge disappointment to the bevy of long August put holders who expected the VIX to drop around expiration.

What about us? Well, our UVXY puts are still in profit. You can track them right here. And my VIX traffic light is still red.

As far as I’m concerned, this is just a temporary spike due to options expiration. And the VIX will continue heading lower over the next several days from here.

Mark’s Watchlist

  1. Apple Inc. (Nasdaq:AAPL)

Volume continues to pour into AAPL options in the form of big money flow.

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There’s a ton of money in options set to expire tomorrow – and something big is definitely coming in this big-time blue-chip.

This is great news for our September call option, up over 50% today. I’d love to know how much money you’ve made on this trade – and the rest of our Profit Takeover winners. Click here to let me know about your biggest Profit Takeover profits – it’ll only take a moment!

  1. AMC Entertainment Holdings Inc. (NYSE:AMC)

AMC has been up for the past five days:

Click To Enlarge

AMC Aug 10-18

But what goes up must come down, right? And that’s especially true for a meme stock like AMC. A drop is coming in this one, and I’m keeping a close eye on it.

  1. Macy’s Inc. (NYSE:M)

M reports earnings tomorrow, and my outlook is essentially the opposite of Target.

TGT had been a juggernaut into earnings. And its report, although it beat expectations, sent the stock down 2% over the course of the day, just as I predicted.

M, however, has been sold into earnings. It’s down 10% over the past five days, and expectations are muted. That’s good for the stock. I think after tomorrow morning’s report, M is going to pop.

  1. Target Corp. (NYSE:TGT)

TGT dropped after earnings just like we expected. But that’s not the only reason it’s landed a spot on my Watchlist. Yesterday, I told you about the Biden admin’s decision to increase food stamps – a move that’s also going to bring up grocery stores like TGT, Kroger, and ACI…

  1. Kroger Co. (NYSE:KR)
  1. Albertsons Companies Inc. (NYSE:ACI)

Tomorrow at 3:30PM – Let’s Trade the Close

Tomorrow at 3:30 PM is the moment we’ve all been waiting for…

A live trade-the-close session featuring me and the Warlock in action!

In the 30 minutes before the market closes, we’re going to walk you through the best trades of the day.

I’ll find the options with the cheapest IV…

And Kenny will pull some of his best day trades straight from the VWAP.

After our trading session is over, you’ll be ready to tackle the end of the week come Friday’s opening bell.

We’ve never done this before – and I want all of my Profit Takeover readers there to see it all.

Click here to add this event to your calendar!

Happy Birthday Tino!

I’m going to end today’s eLetter with a big ‘ole happy birthday shoutout to my son.

I’ve actually got two kids – both boys. Mark II, who we call little Mark, just started middle school. Not sure he’s totally loving it so far, but he’ll get there…

And Valentino (Tino for short) turns five today!

It’s a big week for my boys, and my wife and I have got way too many presents for the little one today, plus a birthday party on Saturday.

But can you blame us? Look at that face! Spitting image of my wife (isn’t he lucky?)

Have a great day, folks. I hope you make just as much money as my wife and I spent on these gifts!

Until tomorrow,

Mark Sebastian


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