The VIX is a widely viewed gauge of market risk or “fear” – the index tracks implied future volatility. With its current low readings, the indicator is pointing to greater complacency in the markets and less fear of rising volatility in the near term.
Nevertheless, investors remain cautious with the current rally. Options volume on VIX futures hit a daily record on Tuesday, with over 1.2 million contracts swapping hands, the highest since Aug. 2011 when the VIX was at 48, reports Doris Frankel for Reuters. [VIX ETF Sees Nearly $1B Quarterly Inflow Despite 43% Drop]
“As volume in VIX options increases, it is a signal that more people are using the contracts as a hedge to their long equity exposure,” Ben Londergan, co-chief executive officer at Group One Trading in Chicago, said in the Reuters article.
For more information on market volatility, visit our volatility category.
Max Chen contributed to this article.