Many seem incredulous as to why and how the CBOE Market Volatility Index, or VIX, which can measure fear in the options market, could possibly sink as low as it has. While it is true that throughout the bull run since March 2009 we have seen sudden upticks in volatility and fear just when the VIX looked read to crater into single digits, it is also worth noting that in order to actually attain the elusive top, which underwater bears are desperate to see, we need to likely first see extreme complacency.
Beyond that, back in the 2003-2007 cyclical bull market we saw the VIX dip as low as 8.60. Now, even if we do not get down there, keep in mind that the VIX did indeed spend plenty of time probing the 10 area (purple line on the monthly VIX chart below). While markets do not go up and down in a straight line–meaning short-term the VIX can bounce–overall looking out the next few months the VIX might need to show much more complacency (lack of puts being bought, too many call options) before bears have more substance to their argument.
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good post chess. I was just thkning the same thing last week. can we see the 07 lows?
too many people and their systems pointing to a sell off.
Sure, we can have a flash event, which would be bought with vigor. But there are too many people left to suck into this rally.
We go higher, VIX to <10!
Thanks…could easily happen
Saw your VIX post and thought I would shed some light on why we sunk so low yesterday:
http://thebullogic.com/the-bullpen/options-trading/392-did-we-just-break-the-vix.html
nice one, thanks