📌 Hedging Demand Has Not Disappeared Despite New Index Highs
As the S&P 500 hit a record high, the VIX instead rose by about 3%. This does not fit the usual combination seen when risk appetite broadly heats up, with stock prices rising and implied volatility declining in tandem. According to the relevant view, the VIX should be closer to 14 in this environment; in reality, it remains near 15.57, indicating that the options market has not fully removed pricing for subsequent volatility.
The price path also supports this point. Over 11 trading days, QQQ first fell 8% over 6 days, then recovered 8% over 5 days. The index returning to its original level does not mean the risk during the holding period has disappeared. Sharp declines and sharp rebounds raise realized volatility and give investors more reason to retain protective positions, thereby supporting options implied volatility.
Therefore, the more accurate description at present is not “low volatility,” but rather the coexistence of index recovery and hedging demand. The VIX is near the year’s low range of 15 to 15.50, and the next three months also typically show a tendency toward a seasonal rebound, but this is not a certain forecast. What to watch next is: if the index continues to rise, can the VIX decline; if not, this divergence means the market is still pricing in room for new shocks.
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