VIX at the daily view.
It looks like the red resistance has been working, for now. I've been shorting VX futures whenever the VIX crossed the red line. However, this red line has a time limit. It becomes less relevant as we get closer to September. It might be sooner... but that's too hard to tell.
As stated before, it will be hard for the VIX to achieve 50 - much to the dismay of the social media crowd. They treat the VIX like a purely inverse index (it's not). The VIX will get muted spikes due to one big reason: cash is a position too. The VIX really spikes when there is increased price range in ES and increased hedges in the options market. When cash is trash, options as a hedge is much more viable. However, during quantitative tightening (QT), cash is king. When cash is king, options as a hedge is not as attractive.
Also as stated before, it will be hard for the VIX to stay below 20 due to longer-term, legally required hedging. Hedge funds are legally required to hedge their positions. During QT, the hedges stay there quite a bit longer. During a bull market, the hedges cover and reposition.
What's next? The VIX is generally range bound for the near future, but it's also winding up. Would there be a big spike? Likely, just not now. I'm not 100% certain when. However, if I were to pick a general time, it would be around September, maybe slightly earlier. That is when there is a lot of rebalancing of the portfolios, fiscal year end for many funds, midterm elections (with some election hedging), and tightening would be in full swing. Near term? Well, June FOMC and Quadruple Witching OPEX are coming up. Usually, about 1.5 weeks lead up to them, there is a local VIX spike. That said, according to the VIX term structure, those hedges were there for several months. I've noticed them back in January 2022 when there is an unusual amount of hedges for July OPEX (which implies hedging for June).
That said, I'd rather wait for VIX spikes to short from. As stated before, during quantitative tightening, timing the VIX spikes becomes harder to predict. Going long in VX for a spike to 50 is the same type of greed as going long for a speculative small cap stock for the potential of similar gains. It's reckless and foolish.
It looks like the red resistance has been working, for now. I've been shorting VX futures whenever the VIX crossed the red line. However, this red line has a time limit. It becomes less relevant as we get closer to September. It might be sooner... but that's too hard to tell.
As stated before, it will be hard for the VIX to achieve 50 - much to the dismay of the social media crowd. They treat the VIX like a purely inverse index (it's not). The VIX will get muted spikes due to one big reason: cash is a position too. The VIX really spikes when there is increased price range in ES and increased hedges in the options market. When cash is trash, options as a hedge is much more viable. However, during quantitative tightening (QT), cash is king. When cash is king, options as a hedge is not as attractive.
Also as stated before, it will be hard for the VIX to stay below 20 due to longer-term, legally required hedging. Hedge funds are legally required to hedge their positions. During QT, the hedges stay there quite a bit longer. During a bull market, the hedges cover and reposition.
What's next? The VIX is generally range bound for the near future, but it's also winding up. Would there be a big spike? Likely, just not now. I'm not 100% certain when. However, if I were to pick a general time, it would be around September, maybe slightly earlier. That is when there is a lot of rebalancing of the portfolios, fiscal year end for many funds, midterm elections (with some election hedging), and tightening would be in full swing. Near term? Well, June FOMC and Quadruple Witching OPEX are coming up. Usually, about 1.5 weeks lead up to them, there is a local VIX spike. That said, according to the VIX term structure, those hedges were there for several months. I've noticed them back in January 2022 when there is an unusual amount of hedges for July OPEX (which implies hedging for June).
That said, I'd rather wait for VIX spikes to short from. As stated before, during quantitative tightening, timing the VIX spikes becomes harder to predict. Going long in VX for a spike to 50 is the same type of greed as going long for a speculative small cap stock for the potential of similar gains. It's reckless and foolish.