It's rare for the S&P 500 and the VIX to post gains on the same day. Here's why it just happened.

MW It's rare for the S&P 500 and the VIX to post gains on the same day. Here's why it just happened.

By Gordon Gottsegen

Traders were positioning themselves for volatility, even as markets moved higher

The S&P 500 and VIX rose in tandem Tuesday.

The stock market has been climbing despite rising geopolitical tensions after the U.S. captured Venezuelan leader Nicolás Maduro. In the wake of the weekend operation, the S&P 500 index SPX gained 0.6% on Monday and another 0.6% on Tuesday.

Perhaps more interesting, however, is that as stocks were gaining, investors were positioning themselves for volatility. The Cboe Volatility Index VIX - often referred to as Wall Street's "fear gauge" - gained 2.7% on Monday alone.

This doesn't happen too often.

"A rising VIX in an up market is not necessarily a warning by itself, but it is a signal," Joe Mazzola, head trading and derivatives strategist at Charles Schwab, told MarketWatch. "It is a signal that the market is pricing in uncertainty."

The VIX measures implied near-term volatility by looking at the premiums that traders are willing to pay on S&P 500 options contracts. Typically, the VIX and S&P 500 have an inverse relationship, so it's rare to see both indexes post moderate gains at the same time. There were only two times in 2025 when the VIX gained 2% or more on the same day that the S&P 500 rose by 0.5% or more, according to Dow Jones Market Data. It has happened only 28 times in the last 10 years, and 37 times in the last 20 years.

Even with markets climbing, a rising VIX implies that traders are bracing for some sort of volatility. Mazzola pointed out that there are plenty of upcoming events that have the potential to move the market.

There's an upcoming jobs report expected at the end of the week, as well as other data on the labor market. The U.S. Supreme Court's ruling on President Trump's tariffs is also looming and could arrive in the not-to-distant future. And then there's escalating geopolitical tensions, with the U.S.'s Venezuelan military operation potentially causing investors to brace for future volatility, even if the stock market shrugged it off in the near term.

However, Mazzola said that it's important to take a step back and understand where the VIX was before its jump.

The volatility index ended 2025 near its lows for the year, with quiet holiday-period trading keeping it muted. For that reason, it was relatively cheap for traders to add options contracts to their portfolios in order to hedge for upcoming market moves.

"It became almost like a buying opportunity, just because of the fact that you're not paying a lot for puts right now relative to calls," Mazzola told MarketWatch - citing more traders flocking to buy options due to cheap premiums as a potential factor influencing the VIX's recent move higher.

Taking a step back and looking at where the VIX was before it jumped this week helps put the move into context, according to Mandy Xu, head of derivatives-market intelligence at Cboe. With the VIX near historical lows, a somewhat small gain in terms of absolute points could seem more dramatic when looking at the change as a percentage. That's one of the reasons Xu said that she likes to measure the VIX's moves in points instead of percentages.

But Xu noted that multiple variables go into calculating the VIX, and that it isn't just a fear gauge as its commonly used moniker suggests.

"The key thing to note is that the VIX, in itself, is not necessarily a measure of fear. It's much more accurately a measure of uncertainty, and uncertainty can be to the upside as well as the downside," she told MarketWatch.

Xu pointed to Cboe's VIX Decomposition tool as a way for traders to further break down the variables that go into calculating the VIX. The tool can also help traders understand what's influencing the VIX on a given day, and which direction that uncertainty skews.

"I think its important to look beyond the headline number to say, 'the VIX went up two points yesterday - but what drove those two points?'" Xu said. For instance, a 2-point VIX gain could be caused by a drop in the S&P 500, or by a growing demand for hedges, she added.

Although the VIX was trading higher early on Tuesday, it ended up losing ground as the trading day went on. The S&P 500, on the other hand, gained 0.6% by Tuesday's close.

Ken Jimenez contributed to this article.

-Gordon Gottsegen

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 06, 2026 17:02 ET (22:02 GMT)

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