Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

Loading...
Most Recent Stories

Is The Volatility Index Really That Low?

One thing we keep seeing all over the place is how the VIX (volatility index) is so low and that this means the market is extremely complacent and therefore on the verge of a decline.  This might be true, but I think it’s important to provide some perspective when using an indicator like the VIX.  To get a better idea of the VIX it can be helpful to look at more than merely the front month contract.  In a recent research note analysts at Societe Generale elaborated on the current environment and the story behind the current VIX levels:

“the most striking aspect of the current situation is the historical steepness of the vol contango, meaning that mid/long-term volatilities are much more expensive (in vol point and historically) than short-term vols. If we try to translate this into a market sentiment analysis, we can say that the market is pretty confident in the short-term outlook but extremely cautious on the longer-term outlook.”

Without getting bogged down in the details, that basically means traders are complacent in the near-term, but extremely cautious in the long-term.  So you kind of have a mixed reading here from a sentiment perspective.  The VIX is useful in gauging perspective, but this is a good example of the mixed messages it can send at time.

Comments are closed.