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February 1, 2018 | S&P Down, Nasdaq Down, DAX Down, Bitcoin Down: VIX Down Too, Why?

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
The equity markets are taking another hit today. Curiously, so is the VIX.

I did not record the timestamp on that snapshot but I believe it was 15 minutes or so before the close.

As of 3:03 PM the S&P rallied back towards even as did the VIX. Curious behavior to say the least.

What’s Going On?

I don’t know, but here are some theories.

  1. Hedge funds and pension funds doubling up on short volatility trade.
  2. Manipulation against Mr. 50-Cent VIX.
  3. Pure complacency. No one wants PUTs.

Points 1 and 3 are more likely.

Short Volatility Trades

I wrote about short volatility trades twice recently.

Volatility was once just a measure. Now it’s an income-generating product. Everyone is selling it says Pennant Capital.”

These short-volatility pension fund managers will get blown out of the water one day.

Mike “Mish” Shedlock

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February 1st, 2018

Posted In: Mish Talk

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