We’ve been waiting for months for the VIX to finally admit defeat.
The index has been holding above 20 for 245 straight days …
To put it in context of Valentine’s Day (ahem, reminder!), this run has lasted longer than the majority of my relationships!
Anyway, not a record, but pretty darn close …
Certainly a record for a bull market, which by the way, we are in.
But on Thursday, something happened that I had not seen in the last year …
The SPX sold off and the VIX did not pop.
Take a look at the price action from yesterday below:
When the S&P 500 sold off, the VIX went up. But unlike in the past year, the VIX did not explode … it only marginally rallied and couldn’t hold that pop.
So what does this mean for VIX and what does this mean for you?
Sub-20 VIX is coming. Maybe today, maybe mid next week …
But it is coming.
The Volatility regime is changing and traders are going to need to get used to trading a sub 20 VIX environment again.
The one stock that I love out of all of this is CBOE.
VIX volume is down 30% year-over-year — because there are no hedgers.
The VIX works great as a hedging product when it's 12, but once it explodes, it is no longer a suitable hedge…
Until it normalizes.
And normal VIX is in the 13-15 range
That is coming sooner than you think.
The Option Pit VIX Light is Red: Short vol is going to work.
Your Only Option