VIX index is trading at 17 pre-market on Friday, August 11th. Once again VIX is overshooting SPY’s move to a significant degree. Either SPY needs to lose additional 2% or VIX index should revert back to mid 14 level.

VIX futures on the other hand are implying a 1% additional loss to SPY from Thursday’s levels. The curve overall is very flat through December. VIX traders seem to believe that SPY won’t trade more than 4% below all-time highs over the next three-four months.

I am looking to sell some December or January SVXY puts if weakness continues.