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Mike Khouw spoke on
CNBC's Options Action about a bearish options activity in CBOE Volatility Index (VIX).
The volatility index dropped to its lowest levels in 2016 and Khouw noticed that one trader is betting that it is going to trade even lower. He explained on the show that somebody bought 15,000 contracts of the June 15 puts in VIX for $0.20 on Monday. The trade breaks even at 14.80 or 25 percent lower at the June expiration.
Khouw added that VIX could reach the strike price of the trade if the S&P 500 jumps to 2,050. He thinks that the volatility in stocks is going to stay elevated at least until volatility in crude oil remains high.
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