Volatility Made an Eyebrow-Raising Move Yesterday
VIX Traffic Light
Look, this kind of movement always raises an eyebrow. Yesterday, the market was up… and so was the VIX. At the peak of the market, the VIX started to rally, and continued to expand throughout the day.
So, what happened?
Well, traders started buying protection again.
With big tech earnings coming out this week, it’s also possible we’re looking at a little bit of an earnings bid entering the index.
My VIX light has been red for weeks – and it still is today. But yesterday, we jumped up to the 16-level. And that changes things.
With this up-and-down movement in the VIX, I’ve got a ton of new volatility trading opportunities on my radar.
And I’m going live with VIX expert Russell Rhoads tomorrow at 2PM to trade them all.
But this session is for Profit Revolution members only. Give us a call at 877.212.9163 to join – or click here to check out all the perks of a membership!
Now, what does this vol shift mean for the rest of the week?
Today is an important day. If the VIX continues to back off, then I’ll feel better about the market.
On the flipside, we could see a pullback or an easing back to 4,550 in the S&P. Maybe we have ourselves a cyclical dip into the end of the month – today’s close will be the deciding factor.
Keep an eye on the VIX – and be sure to check back tomorrow to see what today’s movement means for the future of volatility.
Mark’s Watchlist
- Lockheed Martin Corp. (NYSE:LMT)
After crashing 12% yesterday on missed revenue in their third-quarter earnings report, this aerospace company is at lows we haven’t seen since February:
LMT YTD
This is a stock I’m interested in owning anywhere below $300 – so right now, I’d consider selling the June $300 puts for some nice premium.
- Baidu Inc. (Nasdaq:BIDU)
BIDU looks like it’s going to bounce. Today, it opened around $167 – and my target on this stock is $175 per share.
Right now, the November 5 $170 calls are about $3.80. With earnings coming up the week of the 12th, I’m looking for a pre-report bounce here.
This isn’t one I’d hold through the report though. It’s a Chinese stock, after all – and after those numbers come out, anything could happen.
- Progenity Inc. (Nasdaq:PROG)
PROG blew higher during a crazy day yesterday, breaking above its 200-day moving average (MA), represented by the blue line below, and signaling some further potential upside:
Implied volatility (IV), represented by the green line at the bottom here, is going bananas.
PROG opened at $3.85 today, and it looks like it might make a run at $5. From there, who knows?
The November 19 $4-$5.50 call spread is only 30 cents for $1.50 vertical, and it’s a great, inexpensive way to play that upside.
Today’s Impact Money Trade
Or, most likely, you can guess. Because it’s my favorite stock: Ford Motor Co. (NYSE:F).
Click To Enlarge
I just can’t stay away from F. And this big-money buyer has got a sneaky bullish view of their own.
They were long the November $13 puts, closed them, and rolled them up into the December $15 puts.
Now, what does this mean? With F set to report earnings after the close today, on the surface, this looks like a bet on imminent death.
But that’s not what we’ve got here.
This is almost certainly a hedge trade against some long stock, and this trader is buying puts ahead of earnings as some extra protection.
Why? Because they want to keep the stock.
If this trader thought F was doomed, they’d dump their shares, right?
They’re looking for continued upside. They just want to have a security blanket in case F drops on earnings.
Now, I’m looking to follow this “sneaky bullish” long put with a long call – and I’ve got my eye on the cheapest option in the cheapest month.
The cheapest month to own calls in F is January – and the best calls are the $16s for $1.15.
Given we have about two and a half months until expiration and earnings are tonight, this is a relatively inexpensive play on F catching a little bit of a bid.
Honestly, I wouldn’t be surprised to see knockout earnings from this name. It’s already sold off a little after General Motor Co.’s (NYSE:GM) report. So it’s possible it’s presold any negativity.
F, Oct 2021
We could see a bullish ride here, and frankly, I wouldn’t be surprised to see a run at $17 over the next few days after tonight’s report.
This time tomorrow, I’ll be LIVE with VIX expert Russell Rhoads for a Volatility Trading Session.
And I want to make sure you’re there. Click here to join the Profit Revolution (and lock in your spot at tomorrow’s trading session.)
Or give us a call at 877.212.9163 with any comments, questions, or concerns about joining!
I hope to see YOU in tomorrow’s session,
Mark Sebastian
Mark Sebastian
Founder, Profit Takeover
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October 27 2021
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