VIX Bets Shows Volatility Concerns Ebbing But Not Forgotten
- Futures, ETFs show some investors betting on volatility rise
- Retail investors plough money into leveraged VIX ETF
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Seeing the Cboe Volatility Index finally close below 20 may have settled the nerves of the most anxious investors Friday. But a look at futures and exchange-traded fund flows suggests the all-clear hasn’t been sounded just yet.
The spread between four-month contracts on the so-called fear gauge and front-month ones -- a measure of expected price swings in the medium term -- remains above its 10-year average, and demand for volatility-tracking funds is soaring. That suggests some traders are betting volatility may quickly return amid concerns about stretched valuations and signs of froth in risk assets.