Rising tensions in Eastern Europe have altered the risk dynamic on Wall Street, with the VIX breaking above recent resistance, and the VVIX/VIX ratio likewise trending toward an extreme.
The CBOE Volatility Index (VIX) closed above 30 on Dec. 1 for the first time since February, but based on recent history, that may be a bullish signal for the financial markets.
A sharp spike in market volatility during the fall of 2021 has put the sector in focus, with renewed attention on products like VIX, VXX, VVIX, UVXY and SVXY.
When the major market indices climb to all-time highs, the VIX has historically averaged about 15, but that doesn’t mean investors and traders should abandon active risk management practices during such periods.
With the VVIX/VIX ratio currently surging, it’s worth noting that this precise development has at times previously predicated corrections in the stock market.
“Vol of vol” provides active investors with important insights into the current risk dynamic through metrics like VVIX, VIX, and the VVIX/Vix ratio