On CNBC's "Fast Money Halftime Report", Jeff Gundlach of DoubleLine Capital said it is now possible to buy the December puts in the S&P 500 for the price that allows you to break even or make a lot of money — if the index drops by only 3 percent. He added that the March puts in the S&P 500 are also very attractive because the implied volatility is very low.
Gundlach said hedge funds are currently shorting the VIX, because the carry is very attractive as long as the volatility doesn't spike very much. He believes that the market is going to drop at least 3 percent between now and December, and if that happens, Gundlach thinks that the VIX is easily going to be at 20.
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