Has the volatility washed out of this market? The CBOE Volatility Index, or VIX, which is widely considered to be the best volatility gauge in the market, hit its lowest level since July at the end of last week.
Moreover, short bets on VIX futures contracts hit a record high last week. Typically, when markets are at a record high, traders tend to load up on VIX calls to bet on a downturn. But this time, they are betting on further stock gains and even lower volatility.
This isn't necessarily good news. A lot of market-watchers see this as a contrarian indicator, thinking that when you see a huge amount of excessive optimism in the market, you often tend to get a snap back in the other direction.
No comments:
Post a Comment