Mark Sebastian

Mark Sebastian

Mark Sebastian is a former member of both the Chicago Board Options Exchange and the American Stock Exchange. The Author of the popular trading manual "The Option Traders Hedge fund." He is a frequent guest on CNBC, Fox Business News, Bloomberg, First Business News. Sebastian has been published nationally on Yahoo Finance, quoted in the Wall Street Journal, Reuters, and Bloomberg and is an "all-star contributor" for TheStreet.com's Option Profits Team. Mark is also, the managing editor for Expiring Monthly: The Option Traders Journal an all digital, all options magazine. Mark has spoken for the CBOE, the ISE, CME, VOLX and is a co-host on the popular Option Block Podcast and Volatility Views podcast. Mark has a Bachelor's in Science from Villanova University.

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9 Is the New 10

Looking at the market rip up on the surprising housing news and the old highs are in the rearview mirror as stocks race ahead.  Alex Jacobson, who I co-moderate the Options Block with on the Options Insider Radio Network, made a nice call last week watching the Dow transports make new highs and thinking the […]

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Was VXX Invited To The Party?

One too many mediocre earnings reports sent stocks swooning, coupled with a “tough love” shout by one of the Fed bigwigs.  The simple reason is that stocks have run and the reasons to keep buying them are less compelling.  The big slowdown from the winter deep freeze keeps showing up in company earnings as many […]

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Who Wants to Buy The Juice?

The market drifts lower today and nobody seemed to care.  It is only May 14th and Summer is still a month away officially so this is a bizarre kind of complacency, or is it?  The volatility futures did have a little pullback priced in with the VIX trading near 12%.  The premium in the front […]

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Where is GOOG?

Somewhere, as the market kicks around the all-time highs, the tech stocks are recovering from the shellacking they took.  I don’t know if NFLX will see $400 this year or TSLA $255.  We do have volatility in the large indexes scraping the bottom of the barrel so the big tech selloff has subsided for now. […]

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Turnabout in BWP?

The market is deciding what to do today after making the big volatility crushing run to SPX 1885.52 yesterday.  I can give it a day of rest even for a hyper active bull.  The momentum drivers are a little slower today, so that might be part of it.  Lackluster employment data, of which there seems […]

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FB Closes at a Record High

While the market waited for NFP numbers to come out on Friday, the Fed declared the subzero temperatures was a drag on the economy.  Unless you were selling de-icer or coffee during February, they were probably right.  A little milestone kicked in today, in case you were not watching; FB closed at an all-time record […]

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Is the Retail Sector for Sale?

Stocks are off to a muted start this year as the record highs and so-so earnings reports are at loggerheads.  For all the Iron Condor traders, the market is finally being nice to them and that could be the position for 2014.  If the first 3 weeks is any indication, trade will be of the […]

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VXST – What and Why

One reason I am sad I couldn’t got to the CBOE Risk Mgmt Conference is because I missed some amazing announcements and panels.  In particular, I think the real headline announcement was the announcement of the short term VIX index or VXST.  VXST is going use similar calculations to the VIX but will have 9 […]

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VIX Term Structure, It’s the Slope That Matters

One topic that consistently confuses people is VIX curve structure.  It’s not just the level; it’s the slope that matters.  Let’s look at two curves with very similar underlying VIX prices.  I the difference might be clearer. On March 21st, 2013 the VIX closed at 13.99, .40% more than where the VIX is trading today. […]

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VIX Settling Higher Than 6 VIX Futures

Option Pit Blog It is news when the VIX cash settles at a level that is higher than the VIX futures.  I think it is an even bigger deal when the VIX settles above 6 futures contracts like it did today (almost 7, actually).  Yet, there was something that was also interesting about today, the […]

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Do Non-Farms Matter This Time?

With today’s snoozer in the market, one has to wonder what exactly is holding up the VIX.  Let’s take a look at what we know: 1.  Cliff Deal is done 2.  Debt pushed back to March 3.  Earnings season is so far so good 4.  SPX market volatility is:     Livevol (R) www.livevol.com Seriously, below […]

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Sell the Index and Buy the Stock (Volatility)

(Editors note: Mark sent this to us Friday and due to a system issue we were unable to post it. The prices of the underlying stocks have changed but the concept is right on. Enjoy). Goldman put out a comment prior to earnings season, which was something that I happened to agree with.  It basically […]

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Weekly Option Trading Changed for the Better Today

Option Pit Blog 11-15-12 If you ask anyone at any exchange, they will tell you one of the fastest growing parts of the option business (maybe the only growing part besides VIX) are option weeklies.  This was certainly true among the retail trading public.  If we look around at what the activity looked like in […]

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Something Tasty for AAPL

No talk about the VIX today. Option Pit covered the movements in the blog the last two days, so it is probably time to move on to the other VIX-like products. Other VIX-like products you say? Well, AAPL is so big that it has its own VIX, so let’s take a look at it. Generally, […]

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Well, the VIX Did Backwardate, and So What?

Option Pit Blog With the German High Court signing off on the ECB bond buying bonanza, the ball is now back in the politicians court. The problem, of course, is that is where the ball has been for 3 years. However, the market looked very favorable at the ruling, which takes a huge chunk of […]

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VIX Cash to Future WAY Out of Whack

One of the things we focus on in our option mentoring is understanding VIX.  We teach our option mentoring students to watch the relationship of VIX cash and VIX futures, as they can get out of whack.  Well, let me tell you, they are WAY out of whack right now.  A great resource for watching […]

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Anatomy of a (Not Good) Trade

Thursday August 19th, 2012 With the earnings season coming into full swing and going a bit better than most expected, I thought it would be a good time to dissect a trade we did at Option Pit that did not work out quite as we thought it would. Usually, when I lose money on a […]

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Relative Value of VIX

editors note: Mark Sebastian wrote this Friday. We just got it and hope you’ll enjoy it. One of the first things I teach my options mentoring students, on their way toward a great options education, is to understand how to understand the relative value of VIX.  VIX is not a standalone product; it is a […]

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A Change for Weeklys

Since the listing of weekly options on equities this blog has lamented the inefficiencies of the current system of trading weekly options.  We have argued that it made little to no sense to list an option that has 8 days of life to it, 2 of which are the weekend.  The set up has led […]

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What is Good Risk Management?

As our February Gold Class prepares to take their last class on portfolio risk management, it caused me to take pause. Good risk management can mean many things to many people. Some consider risk management the process of managing winners and losers. If they have an iron condor, butterfly, calendar, or any host of trades, and traders […]

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VIX Weekend Option Decay Late to Arrive

A while back on the Option911 blog (our former name) I wrote a piece about option time decay and the weekend (Read it here).  The basis of the article was that by Friday, there was almost no point in selling option premium because the entire weekend was priced out of options ahead of the weekend. […]

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The VIX and Time Decay

A while back on the Option911 blog (our former name) I wrote a piece about option time decay and the weekend (Read it here).  The basis of the article was that by Friday, there was almost no point in selling option premium because the entire weekend was priced out of options ahead of the weekend. […]

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AAPL – Are Options Telling Us No Dividend?

We get questions at Option Pit on a wide range of topics related to options. After all, that is part of what we are here for. After the giant earnings release in AAPL last week, I thought it fitting to ponder if AAPL will payout some of that largesse they have squirreled away. Maybe before […]

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VIX of 20

I have to admit, while I have been expecting the VIX to return to normalcy, I have been shocked at the speed at which it moved down.  I have been writing for some time that I expect the VIX to fall down and fall down hard.  We wrote about how in December we were expecting […]

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My Options Reading List

One of the questions I get from my option mentoring students is “What are the best books to learn options trading?” It’s a good question as there are about 1,000,000 books out there all claiming to be the best option books. The truth is, for every great options book there are about 9 or 10 […]

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Christmas, VIX and the VXX

This is a very, very interesting (and somewhat advanced) blog by Mark Sebastian. And I can not think of a financial web-site where I can find Bob Barker’s birthday thrown in! Enjoy. MK & JW VXX is one of the more interesting products that are available to trade.  The ETN is so interesting because, on […]

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The VIX – A Unique Beast at Expiration

As many of you know the VIX options are quite a unique beast. The options themselves trade as if the underlying was the VIX futures, but on the final day settle into something close to the VIX cash index. For those unfamiliar with how the options trade, at 30 days to expiration, the VIX futures […]

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Gamma and Delta

In the world of options nothing confuses people more than the Greeks. What’s more, within the Greeks nothing confuses traders more than the relationship between delta and gamma. For some reason many traders have a lot of trouble separating the signs of delta and gamma. It seems that many traders can’t get passed that fact […]

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The Bid – Ask Spread: Choosing a Strategy

One of the most common questions I get about income trading is, “What is the difference between a call fly, a put fly, or an iron butterfly?” The follow up question almost always is, “Do I prefer one or the other?” Synthetically, the short answer is “no, I do not care.” Because of the nature […]

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Volatility Skew – Part 2

Last time we discussed what exactly volatility skew (or smile) is and why it exists (scroll down to my 5-23 blog if you’d like to re-read it). As I finish skew discussions, I almost always get the question: “So what! How is this going to help me trade?” Without getting into the “the more you […]

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Volatility Skew

At Option Pit one of our major educational focuses is teaching traders to use volatility and volatility skew to improve both directional and non-directional trading.  You would think my services would be in constant demand, except for one problem…many traders don’t know that volatility skew exists, let alone understand what it is.  In this post, […]

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Greeks and Volatility

One of the more misunderstood concepts about trading are the Greeks. Many traders think that the Greeks they are looking at in a call spread, or iron butterfly, are solid as a rock. Maybe if the rock is one of one of those fake rocks from old Star Trek Episodes. The truth is, the Greeks […]

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A Breakdown of GVZ

On April 12th, the GVZ finally began trading. While it has not come running out of the gate with huge volume, my hope is that eventually the product will take off. I simply feel it is too good of a product to not do so. There are too many traders involved in Gold for this […]

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Call Spread, Put Spread

As an option mentor, one of the most common questions I get is “do I really need to know synthetic’s to trade options?” My answer is usually as follows “No, you don’t; however, by understanding these concepts your odds of success are greatly improved.” While I have already explained a few of the most complex […]

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Open Interest – Is It Always Meaningful

Agree or disagree, a lot of traders pay attention to open interest in a given security. This makes a lot of sense in individual equities, ETF’s and indexes. The reason open interest matters so much is that the more open interest, typically, the more liquidity there will be in that given month or strike. Understanding open interest […]

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Trading VIX Options

VIX futures and the VIX options may be an excellent tool for both hedging and speculating on forward volatility. The problem is some trading platforms that have VIX options do not carry a Chicago Futures Exchange data feed. Traders may have access to a great speculative and hedging product in the VIX options, but without […]