You are seeing the forces of forced selling with options expiration this week. The lower the market goes, the more that traders have to sell. The final hour today felt like liquidation, and we will likely get a partial continuation tomorrow, but by Friday, it should be over. The VIX is way too low here, just because its near the end of the year, no one is willing to pay up for protection. A VIX at 18 with this kind of action is puzzling. I am looking to buy the blood on the Streets tomorrow, with an expectation of a bounce back up to the 1380 level next week.
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2 comments:
Thank you so much for the update. As a newbie on trading, just want to know what do you mean "Nobody want to pay the protection?"
thanks
Tony
It just means that traders are not willing to pay a lot for puts to protect their portfolios. That is why the VIX is relatively low considering the correction we've had.
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