"The VIX is down because the market loves certainty and within 24 hours, we should know who our next president will be," said Joe Kinahan, chief derivatives strategist at Chicago-based online brokerage thinkorswim Group.
Fast Money’s resident options trader Pete Najarian agrees. But whether the current rally is based on an Obama victory or something else entirely, Najarian thinks the issue now is sustainability.
In other words, the Pit Boss suspects the next leg could be lower. “I have been taking off whatever has worked over the past week. Not necessarily shorting yet but looking,” he tells Dylan Ratigan on Closing Bell.
And if you’re interested in a short play, railroads might be a good place to start. “Burlington Northern was just trading under $80 and now it’s north of $90. The P/E level could be infront of itself. Same with Union Pacific and Norfolk Southern”, Najarian says.
Another notable sign: During Tuesday's session, the cash VIX hit a level that was below the front-month November VIX futures contract on the CBOE futures exchange. In afternoon trade, November VIX futures stood at 46.49 after hitting a low of 43.80.
"That's the first time since early September that the premium has shunk to parity with the future. We had been up as much as 24 points over the future, so this is record shrinkage," says Pete’s brother Jon Najarian, on optionmonster.com
What's the bottom line? An Obama victory could mean less volatility for the stock market going forward.
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CNBC.com with wires