Irrational Exuberance Is Here: VIX Lowest Since July 2007 As Options Speculation Highest Since Dot Com Days

Tyler Durden's picture

The VIX has just hit the lowest level since July of 2007 as Sentiment Trader reports that "speculation in the options market has spiked to its highest levels since the spring of 2000." The government's endorsed moral hazard policy has now lead to the worst of both the and the housing bubbles. There is nothing that can ever again default or lose money: Uncle Sam is there with your money to guarantee it. Ben Bernanke sees no bubble anywhere.

At the same time, as VIX plummets, MOVE, or the Treasury volatility index, has surged to multi month highs.Once again, the market realizes that the next big shake up will not be in equities, whose worth is only there for so long as the government can keep issuing its pieces of paper, but in the Treasury market. And even as the Dow 36,000 is now guaranteed, a 4 Year at 5.5% is seeing as increasingly likely.

Presenting the ratio of the VIX to MOVE

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virgilcaine's picture

The Market , Its 'Hans' on The Price is Right cliff hanger game..  love that analogy.

yabs's picture


I think you have all these conflicting things happening as to be honest the entire systemn is broken beyond repair

thats why one minute you read say that the UK is looking to recover the best and the next moment you read a report that says it is the most screwed. There is literally no way to measure anything in a broken/manipulated system

its a bit like flying a plane I guess with all the controls broken

one minute the display shows you are at 2000ft the next its at 1000ft. One pilot may say its underestimating the height , maybe another one says its overestimating.  I guess as long as you have fuel and no big hurdles in your way like a mountain

in a fog you are ok but if one crops up and you need to know precisely how high you are you are f*cked. I sense that this mountain may be fast approaching. what the outcome will be is anyones guess, Ie currency collpase or stock collapse, or both

trav7777's picture


Look, folks...when your compass says you are going west and you are flying INTO the rising sun, you either believe the instruments or your lying eyes.

The metrics are giving us readings that make NO SENSE in the system that we are ASSUMING that we are operating in.

EVERY piece of economic theory only MADE SENSE during the Era of Growth.  We have left that era.

If your compass is reading W while you fly past NYC en route to the Atlantic, there is only one possibility.  Eliminate the impossible; what remains must be the truth.  The fundamental axioms are no longer valid.

Assetman's picture

Man... that's deep.

Me likey.

WaterWings's picture

Excellent comment.

Most of America is too busy watching the in-flight movie, if they are even awake, to take a looksey out the window.

cougar_w's picture

Add to this the reality that most of us here have only ever known the "growth system" and on sensing a "no grow system" emerging see that as a threat or failure. Well for most of human history there was little or no net growth, only evolution of technology and ideas. We're going back to that, have no fear. But most of us won't recognize it as what it is, which is the old normal.

300 years of speculation and abnormal expansion past resource limits are about to implode. Though many will certainly suffer, this implosion is not a catastrophe itself; it is the only hope remaining for most of us to get out of the machine intact before it blows up properly and kills us all.

yabs's picture

the only thing thats even more surprising for me is I would have thought in a system this broken volatility would be much greater

yabs's picture

whats even more amazi ng that is that people still think any technical analysis applies. ALL TECH analysis means sh*t in this market IMHO

Mr Lennon Hendrix's picture

The VIX is way to low.....way, way, way to low.  I think once BS' magic press ran out of primer, he may have used it over the head of the VIX.  WHACK!  "That should do it."  He said as the press lay shattered over the bloody corpse of the said victim.

yabs's picture

just more evidence that the system is broken beyond repair

SME MOFO's picture

The VIX is low because people are selling options, hitting every bid for months now.  If you know there are hundreds of billions set aside to goose the market for a given period, a nice spiff is to short the living F*c* out of the puts.  Also, if you are a mutual fund manager you can't afford being short or even flat in a zoomy-zoom market like this or you will lose your job.  So they buy buy buy and then to take the edge off collar it by buying the downside puts and selling the far upside calls on a 10 to 1 ratio.  Everything shoves the bid down across the smile.  Of course, it helps knowing the exact size and duration of the government bid, but I'm sure our politicians and central bankers have locked lips and lost keys.