I woke up in the middle of the night and knew they had to do something.

I woke up in the middle of the night to use the bathroom, looked at the futures, and thought: they have to do something.

I have been watching vol for thirty years. I built the expected move framework at thinkorswim from scratch. 

When the S&P is melting away at 3 AM, you do not need a tweet to know a tweet is coming.

Sure enough. Iran talks. Halting strikes. The Dow gapped a thousand points at the open.

And then the interesting thing happened.

The VIX crashed to 20.28. Then it climbed all the way back.

The VIX, which measures fear in the options market, closed Friday at 26.78. It gapped all the way down to 20.28 on the Iran news. That is a six-point crash in one morning.

But it did not stay there.

As the session went on, vol climbed back. On a day the market is up over a hundred points. Jeff Bierman walked on this morning and looked at the tape.

He said three words: this is not healthy. That is a guy who has been trading for decades. He was not looking at the Dow number. He was looking at vol.

The options market took the good news. Priced in a relief rally. And then started buying protection again.

That is backwardation. And it does not lie.

Backwardation is when the near-term vol future is priced higher than the longer-term vol future. In plain English: the market sees more risk in the next three weeks than in the next three months.

After the gap, the VIX futures were still sitting 45 cents in backwardation. The VVIX, which tracks how nervous traders are about vol itself, barely moved off the open.

Vol crashed on the headline. Vol came back on the reality. That is the market telling you it does not trust what it just heard.

The number nobody mentioned

After the gap, after the pullback, the expected move still had $42 of movement left priced in for today. The at-the-money options, the contracts closest to the current price, were nearly two dollars.

That is expensive for a market that supposedly just resolved a crisis.

The vol came back for a reason.

What you do with that

Use a spread. There is not even a question.

Buying naked options, meaning a single call or put with nothing to offset it, at two dollars when vol is reasserting like this is not trading. It is donation. The premium decay eats you alive even if you are right on direction.

Sell a call above the market. Buy another call further out to cap your risk.

You collect premium. You define your maximum loss. If the market stays below your short strike, you keep the premium regardless of what vol does.

That is the structure I want when vol is climbing back into a rally and the options market is still pricing in $42 of movement for the day.

When vol crashes and then climbs back, the market is telling you it does not trust the headline. 

When backwardation holds after a gap, the market is telling you the risk is still here. When options are priced for $42 of movement in a single session, the market is telling you exactly how to trade it.

Spreads only.

Tomorrow at 1 PM ET I am going live to trade Superfly — my zero DTE options strategy built for exactly this kind of environment.

I made 218% on on my Meta trade in one day using it. 

And on Tuesday, you can watch me find the setup, build the spread, and manage it from entry to exit in a live market. 

I’ll be trading live…RSVP here. 

To your success,

Don Kaufman

P.S. The VIX crashed to 20.28 this morning and climbed all the way back toward 26 by mid-session.

That is not a market that just got fixed. That is a market that faked left and went right. Tomorrow I will show you how to trade it.