[Ed. – The plunge does seem to be accompanied by little alarm or precipitate adjustment, at least by the ordinary indicators. My big-picture take: there’s nowhere else to go. Investors don’t want to be left holding the bag, but they don’t expect counter-equity investment mechanisms to perform well in this one. From here, it smells like hunkering down across the board, rather than pursuing short-term marginal payoffs that are likely to merely leave you exposed. We’ve reached the end of the road.]
Despite the jarring move lower, the market’s so-called fear gauge, or VIX, has remained unusually calm.
“What we’ve seen out of the options market is the lack of expectation of this sell-off that came, volatility was really muted,” Harvest Volatility Group’s Dennis Davitt told CNBC’s “Trading Nation” last week.
“Most of the conversations on options trading desks this week up and down Wall Street were about the lack of the performance that we’re seeing in the VIX,” he added.
The VIX, which trades inversely with the S&P 500, briefly peeked above 30 on Friday. Yet the index has steadily traded near 25 for the majority of this year’s brutal tumble. That’s significantly lower than the levels seen during the August swoon.