If one was inclined to play this triangle, a trader could put on a butterfly whose short ‘guts’ is at the apex of the consolidation in May and hope for horizontal action. Should a trader put on the spread now at the aforementioned level, the spread would actually have a negative Vega position, for price is at the short strike, which is fine if that confirms your thesis. Otherwise, it may be prudent to wait until oil hits one of the two trend lines. A short Vega position may not be wise considering the historically low VIX level and how ‘on edge’ this market seems to be. Should oil keep rallying, this action may support the oil and gas sector and put a damper on the retail sector and force capital to shift sectors, which may cause volatility too.
Either way opinions might fall; oil is absolutely a key driver to watch in a market that is mostly consumed by what AAPL and GOOG are doing.
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