While USO is not the best tracker of crude oil, its implied volatility is differnt. The OVX (USO VIX) and OIV (WTI VIX) almost mirror eachother. The correlations of their IV's is near 100%. So I found it interesting yesterday when I looked at OIV and saw a 70 handle in the index. Well, looking at Livevol IV charts we are officially at the same panic levels that saw oil find a bottom last year in Feb of 2015...oils 1st and maybe more brutal trouncing. Take a look at where the red line is relative to last year.
The one thing that has been stunning about this sell off has been the total lack of volatility as seen in the VIX. The VIX barely touched over 30 on Friday despite the middle of a 60 point sell off and a new low below levels from August. By the end of the day the VIX closed around 27. Today we saw the same thing, the SPX rocketed higher on the open and VIX got killed. Then by days end the entire rally was gone, and in fact the SPX had been down as much at 15 at one point. But take a look at VIX with the market up 14 and the market flat...coming off a huge sell off.