The VIX Moves to Its Early 2020 Low. What It Means.
$Cboe Volatility Index(VIX)$, which measures the expected volatility of the U.S. stock market, is on pace to close at the lowest level in more than three years.
The index was at 13.83 on last friday, nearing its February 2020 low.
Image
What does the low data of $Cboe Volatility Index(VIX)$ Means？
Looking back at the historical trend of the VIX index, as long as the VIX index is at a high level, it is usually when the stock market is more panicked and there is negative news, so it is regarded as a "fear index".
If the VIX index is lower than 20, it usually means that the financial market is in a stable stage;
if it exceeds 30, it indicates that the current market fluctuates greatly and investors start to panic;
if the VIX index is higher than 40, it means that there is irrational panic in the market, and the stock market has crash risk.
Many investors noticed that because they see huge call buys on $Cboe Volatility Index(VIX)$
Image
This was a -12m delta notional put trade where puts were bought on 5/24, the bottom.. we’re talking about a 40m delta notional trade where calls were bought. This is just total notional delta - it's not by strike. But because the volume came in one time tick, that's one trade.. huge
Barron’s Karishma Vanjani shared in her article:
The move points to a lack of major concerns in the stock market. The $S&P 500(.SPX)$, at 4,279.53, is nearing a new bull market, more evidence that market participants are feeling optimistic.
Jay Kaeppel, Senior Market Analyst at http://Sentimentrader.com:
If all the “VIX PLUMMETS TO 3-YEAR LOWS!!!” headlines are causing you angst…
Red dots = every time $Cboe Volatility Index(VIX)$ dropped below 15.
A bullish sure thing? Nope.
Something to fear? Also nope.
Image
Kurt S. Altrichter, CRPS, CIO at Fiduciary Financial Advisor shared VIX/MOVE ratio at lowest level since 1996.
Image
All in all The lowest $Cboe Volatility Index(VIX)$ since the pandemic started is something that deserves attention.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
It's important to remember that call buying on the VIX doesn't necessarily mean a crash is imminent, as the VIX can also rise due to other factors such as geopolitical tensions or unexpected economic data.
Always do your own research and consult with a financial advisor before making any investment decisions.
Investors may be using call options on the VIX as a way to hedge against potential market volatility.
Great ariticle, would you like to share it?