Last week, the VIX jumped 24%–the most in four months–and daily records had been set for CBOE VIX futures, ?CBOE gold ETF VIX futures and CBOE VIX options.
On Monday the VIX is currently at 14.34 and in order to hit its long-term average, the index would need to rise greater than?33%, reported Barron’s Brendan Conway. But if you take a closer look, volatility is still pretty quiet.?
This comes amid options traders placing their bets on rising volatility as noted by shares of?iPath S&P 500 VIX Short-Term Futures ETN on April 15 reaching an all-time high at 68.8 million, according to Bloomberg. Add in ProShares Ultra VIX Short-Term Futures hitting their own record with 54.6 million shares on April 11 and when looking at these two products over the last 30 days, they’ve had the greatest volume.?
But even with these record-breaking volumes, the?VIX remains 9 percent below its average for the last year, reported Bloomberg and stock volatility will “remain subdued until the Fed pares its stimulus policy,” according to Steve Kilcullen of Nomura Holdings Inc. in?New York.
He said via Bloomberg, ?The trading is very defensive, but it has a short focus. Equity volatility won?t go higher until we see policy change or a reduction of policy effectiveness in the U.S.?
One trader went so far as to place the VIX in a range. Philippe Trouve, the VIX options trader and director for equity derivatives at Bank of America Corp. in New York, said to Bloomberg,??I expect the VIX to be range bound between 12 and 20. It will be volatile within that range because the macro environment is very binary: inflation or deflation, more QE or less QE, so the market is struggling with all these potential outcomes.?
How high do you think the VIX will go?