Volatility in the Future

The VIX (implied volatility index) has become very steep.

The 7th contract (6 months out) is significantly higher than current implied volatility.

What does this mean?

It simply means that the market is pricing in risks of a correction later on in the year.

Will it happen? Nothing is for certain, and if you have a long term diversified strategy (which hopefully you do) then this may just be a bump in the road

 



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The Dow Jones Industrial Average is an unmanaged, price-weighted index of 30 large capitalization stocks with dividends reinvested.

The Standard & Poor’s 500 Index (“S&P 500”) is an unmanaged, market capitalization weighted index of 500 widely held stocks, with dividends reinvested, and is often used as a proxy for the stock market.

The Nasdaq Composite is an unmanaged, market capitalization weighted index of stocks listed on the Nasdaq Stock Exchange, and are reported as price return without reinvestment of dividends.

Indexes are often used as a proxy for the stock market and cannot be invested in directly.