What continues to fascinate me about the price action from the last two trading days is how "meh" the markets have actually reacted to the selloffs. I'm not exactly sure why.
We opened down 50 and it took a move to down 80 points in the S&P 500 for us to touch a new high in the VIX.
With every rally the VIX feels softer and implied volatility (IV) feels incredibly heavy. While I do not think we are lined up for what happened on Friday, we could see another rip in the opposite direction Tuesday.
The market wants to push the VIX back to 15 -- the price action from Friday proves it. Additionally, how much uncertainty is there really? We know the chip each player has. The question I guess is who will use what?
There are a few rumors about the Chinese selling Treasuries. That will not happen.
They are also unlikely to go after Apple (AAPL) the way they called out Boeing (BA) today. Boeing has made itself an easy target. Apple is trickier, as I think it would be a real problem internationally for China Mobile (CHL) , ZTE Corp. (ZTCOF) , etc.
Maybe we have another day of this, maybe two, but does anyone really think this feels even remotely as scary as December? I certainly do not.
I would be a buyer of the VIX May 16 puts for $0.45. To put things in perspective these settled $1.35 on Friday.
I would also be looking for LEAPS plays again. I'll be writing a bunch of those types of trades this week if there are any more teeth to this selloff.
Trade: Buy to open 1 VIX May22 16 put for $0.45.