VIX futures! History is made!
It's fascinating what I've uncovered while studying what happened in the volatility market last week. History was literally made! We've seen daily, weekly, and monthly gains and declines that were NEVER seen before last week! In particular, VIX futures saw some of the more interesting moves.. Lets take a look at some of those moves below:
As impressive as the up moves in VIX futures were last week, you have to pay attention to the down moves as well. Lets take a look at some of those historic up moves:
Impressive as that above chart is, the weekly chart tells an even more fascinating story.
The 4th chart puts the cherry on top of the historic things we've seen in VIX futures recently.
What is causing these massive moves in VIX futures? Volatility etfs/etns have a role to play for sure, but so does leverage. The FED has an even bigger role to play here. At the end of the day, if the federal funds rate stays too low for too long, it forces humans to do things that they wouldn't normally do. They take on bigger and bigger risk because the cost of borrowing is cheap! When the cost of borrowing starts to go higher, that is when the dominos start to fall and we hit the reset button!
Thank you for reading!
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