In the last few days the market has continued to see vol collapse and the market hit new highs. Meanwhile USO has started to churn up and down but IV has crept up. This wont last and should be sold. An OVX above 40 is too high, an OVX above 35 is probably too high.
After 12 months of tight correlation to oil prices the SPX broke free somewhere around $50 per barrel. Since we are a global economy there is always something to jump in the way and replace it. That new something is the British Pound and it is losing value with frightful alacrity. The ETF that tracks the pound is FXB and is a good enough vehicle to trade the British Pounds moment.
While the VIX is back below 15% and maybe heading toward the 13's VIX IV (the VVIX) is still elevated at 90%. However, its no where NEAR where it was and continues to collapse.
To me this presents one of two ideas
At one point in time the S&P 500 was down about 1.1%, about 22 points, not a bad sell off considering VIX was in the 14s on Friday. Yet, here we are ending down by about 2/3% and the VIX couldn't even hold up the weekend adjustment. For the time being there appears to be no fear. At no point in time, on a relative scale was VIX near levels it opened up at, and even down 22 didnt come close to 17.