The VIX cash is now trading at a discount of about .75 to the May future. Does this mean all is well in the world of VIX, and that we can sound the all clear?
No it does not, while IV is certainly in today, the VIX cash is actually trading at about parity with the May future. The weekend effect is distorting the current price. You can read about weekend effect here. Thus when we look at a VIX futures curve what is really going on?
Not long ago the SPX was sitting around 1350 right after the President got elected. Now we sit 2 handles from an all-time high in the big index. For those who bought the top in 2000 and 2007 you are looking sweet right now. Reinvest those dividends and you still did better than a CD although the gray hair in the process probably counts for something. And where is the public in all this? Nowhere, that is where. Liquidity is paltry by the standards of the retail investor. A few are out there but besides the big financial news outlets no one really cares. I will make a bold prediction and say we make an all-time high within a week. I am not here to make a bullish case but some stocks that have been nowh
One of the first things we try to convey in the Pit Report each day is what the volatility markets are doing. There is always room to discuss a stock going up or down, but volatility study is one of the places we help our clients the most. A day like today is the perfect example. The reason being, of course, is what the numbers say, and what is really happening can be two different things. For instance, the closing number on the VIX today was 12.58, up about .12 on the day. At first glance, that is the volatility up slightly on a day when the market hit another short term high with the SPX just an open away from 1500. Those seem to be two contradictory things.