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VIX Plunges To 5 Year Low

Tyler Durden's picture


VIX at its lowest (sub-14%) since Summer 2007...

and the Volatility term structure, its steepest EVER...


Short-term volatility (risk) is the lowest relative to medium-term risk EVER - is this the biggest ever levered bet on FOMC calmness into European election event risk? Or more technically is this late forced unwinds of legacy long vol/steepeners into the Greece March 20th event risk (which seemed like a decent trade looking for a risk-flare). Given the steepness of the rest of the curve, it certainly feels very technical (flow) driven.

Charts: Bloomberg


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Tue, 03/13/2012 - 09:57 | 2250138 rajat_bhatia
rajat_bhatia's picture

The Vixens are getting ready to ........

Tue, 03/13/2012 - 10:01 | 2250158 JPM Hater001
JPM Hater001's picture

Oh no.  I'll get the stuff ready...we're goin over 13000.

Tue, 03/13/2012 - 10:07 | 2250183 spiral_eyes
spiral_eyes's picture

i heard we were going over 36000

Tue, 03/13/2012 - 10:10 | 2250194 SilverTree
SilverTree's picture

I voted for Dr Paul and 24 of his delegates today in Alabama. It would be nice to vote again for him in the General.


Alas, I fear it is too late.

Tue, 03/13/2012 - 10:14 | 2250214 Winston Churchill
Winston Churchill's picture

Death was pronounced in 2008.

Just waiting for bowel evacuation of corpse.

Tue, 03/13/2012 - 10:28 | 2250264 Killtruck
Killtruck's picture

You, sir, have a brilliant grasp of both the situation and the english language. Well played and nicely put.

Tue, 03/13/2012 - 10:57 | 2250368 JPM Hater001
JPM Hater001's picture

Wow- we are up 78!  This is AWESOME!!!!!!!


Tue, 03/13/2012 - 13:02 | 2250806 Winston Churchill
Winston Churchill's picture

Thank you.

Like my namesake.American mother..Hoever Swiss anglophile father..

English public school.not Eton.


Tue, 03/13/2012 - 10:19 | 2250231 naiverealist
naiverealist's picture

Never forget about the last bastion of voters choice, the WRITE IN vote.

Tue, 03/13/2012 - 10:28 | 2250268 Dr. Engali
Dr. Engali's picture

I'll be writing his name in when I vote.

Tue, 03/13/2012 - 10:28 | 2250270 unununium
unununium's picture

Your pseudonym is very apropos.

Tue, 03/13/2012 - 12:21 | 2250641 Lost Wages
Lost Wages's picture

Do the Diebold machines have a spot for write-ins? Because the only way I will vote this year is if I can put in my own name.

Tue, 03/13/2012 - 12:36 | 2250698 LeBalance
LeBalance's picture

mickey fucking mouse.

Tue, 03/13/2012 - 10:39 | 2250306 Hansel
Hansel's picture

Video: Santorum recommends voting for Ron Paul

Teh lulz, hahahaha.

Tue, 03/13/2012 - 11:12 | 2250432 Ruffcut
Ruffcut's picture

We can't find a fix, so let's play with the vix. CBOE, criminal bitchezz of evil.

Tue, 03/13/2012 - 09:57 | 2250139 LongSoupLine
LongSoupLine's picture

Some cheap f'ing puts is how I see it...

Tue, 03/13/2012 - 09:59 | 2250151 resurger
resurger's picture

no shit!

i have seen puts 150,000K! thats normal


Tue, 03/13/2012 - 09:57 | 2250140 Squishi
Squishi's picture

even ice melts.

Tue, 03/13/2012 - 09:58 | 2250143 spiral_eyes
spiral_eyes's picture

Greece defaults (the moment of supposed disaster) and the world decides that there is now less voltaility than ever.


Hurrah for central planning! Hurrah for big government! Hurrah for socialism to save capitalism! Newly-printed 010101110001010100101 for everyone!

That's what a recovery looks like, extension and pretension! 

Meanwhile, back in the real world...

Tue, 03/13/2012 - 10:31 | 2250272 SheepDog-One
SheepDog-One's picture

YEA amazing isnt it....the 'What can never be spoken' moment Greek default happened, and no one even batted an eye. But for TWO YEARS we were told we had to bail it out and support it and do whatever it took to fix it because a default would be SO terrible and all...just been played by the criminals big time.


Tue, 03/13/2012 - 10:52 | 2250350 toothpicker
toothpicker's picture

A big thanks to our controlled media: "nothing to see here"

Tue, 03/13/2012 - 12:30 | 2250678 rqb1
rqb1's picture

well said

Tue, 03/13/2012 - 09:59 | 2250147 fonzannoon
fonzannoon's picture

If the vix and it's variations are so low why do I keep reading that they are still at a substantial premium to NAV therefore implying that the still could have a way to go on the downside?

Tue, 03/13/2012 - 10:00 | 2250153 Comay Mierda
Comay Mierda's picture

double top in spx, downward wedge in vix, back up the truck!

Tue, 03/13/2012 - 10:02 | 2250167 Cdad
Cdad's picture

Yep...VIX time compression trade.  Grab the front month.

Tue, 03/13/2012 - 11:16 | 2250455 Stoploss
Stoploss's picture

Skew is 139 an a quarta. It's only been higher one time, and not by much. Not so sure VIX is still reliable, but there's nothing else.

Tue, 03/13/2012 - 10:05 | 2250178 resurger
resurger's picture

think of VIX as a CDS against equity shock:

in my perspective, the higher the stocks go from now on (am thinking this is the top because of volume) the more investors will be attracted to hedge their risk, so i think we will reach a stage where stocks are in the green, and the vixes are also in the green..


Tue, 03/13/2012 - 10:20 | 2250232 dwdollar
dwdollar's picture

I'm trying to resist the urge to trade paper, but my inner bear is restless.

Tue, 03/13/2012 - 13:28 | 2250886 Nobody For President
Nobody For President's picture

double top in spx, downward wedge in vix, back up the truck!


Let us wax poetic:

Double top in spx,

Downward wedge in vix;

Back up the Truck

You dumb fuck, 

And give Bens' backside some licks.

Tue, 03/13/2012 - 14:19 | 2251105 GovtMediaLiars
GovtMediaLiars's picture

I'm of the view that yesterday and today's action in the VIX is the culmination of the bottoming process that it has been undergoing for a couple weeks. 
And we don't believe that it can move sideways for long in the current environment. 

It's too bad the VXX is such a terrible vehicle but there are certainly other volatility plays to consider. Tough not to be long equities right now but on the other hand some kind of hedging is clearly in order here and going long volatility in some form could certainly be an option to consider.

Market Madness
Market Madness Metals

Tue, 03/13/2012 - 10:00 | 2250156 Jason T
Jason T's picture

so puts can be bought quite cheaply.  


All I know is, China built 9 milllion cars in 2009 and 18 million in 2011, just 2 years later.  This idea that oil and gas is up only temporary is a complete load of crap.  The wealth of the world has moved from the US to China ..and like lightening, it'll strike that the masses realize it.

Tue, 03/13/2012 - 10:28 | 2250266 SheepDog-One
SheepDog-One's picture

Thats how I see it. While most everyone believes theres '3 years till somethin happens' or whatever, I believe the opposite, this will be brought down by some 'event' out of left field 'no one saw comin' and gives perfect cover for the FED banksters as they make off with all the loot and leave Avg Joe retail investor broke.

Tue, 03/13/2012 - 10:01 | 2250161 NEOSERF
NEOSERF's picture

Computers can't feel emotion and thus tend towards complacency

Tue, 03/13/2012 - 10:11 | 2250165 ekm
ekm's picture

Central planners believe they can decide when to HOLD UP the market and .......when to CRASH it.


Hence, they want to hold it up during GREEK CDS clearances and than allow it to "slowly" decline.


Tue, 03/13/2012 - 10:05 | 2250169 Dr. Engali
Dr. Engali's picture

Let's see, we are on the verge of war with Iran, all hell is breaking loose in Afghanistan, gas prices are through the roof, house prices are still falling, the Euro is falling apart,and the vix is at a 5 year low. Sleep little sheep ,sleep. Don't worry this will end well.

Tue, 03/13/2012 - 11:16 | 2250454 Zero Debt
Zero Debt's picture

Those are all known pieces of information and are already discounted. It would take something unexpected to make VIX shoot up (i.e. equities to move in either direction to affect vol term structure) such as events that would derail the debt ponzi, e.g. actual "disorderly" (ordinary) defaults, a two-notch US devt rating downgrades out of the blue, sudden talk about austerity referendum in a new place e.g. Spain, etc.

Tue, 03/13/2012 - 12:04 | 2250601 francis_sawyer
francis_sawyer's picture


Quiet! You're disturbing my concentration on filling out my NCAA brackets...

Tue, 03/13/2012 - 10:23 | 2250175 DormRoom
DormRoom's picture

when you have this much Central Bank intervention it distorts market signals, and mask risks.   Can't tell up from down.  EURUSD signal broken.  VIX signal broken.  Libor rate broken. CAn't even trust Okun's law. wtf.

Tue, 03/13/2012 - 11:45 | 2250558 359766
359766's picture

trust yourself ... there aren't (m)any other options.

Tue, 03/13/2012 - 10:04 | 2250177 ekm
ekm's picture



Tue, 03/13/2012 - 10:14 | 2250210 GeneMarchbanks
GeneMarchbanks's picture

Ixnay on the APSKay, what say?

Tue, 03/13/2012 - 10:39 | 2250303 ekm
ekm's picture

Not into trading. I can't understand what you're saying.

I'm a macro guy.

Tue, 03/13/2012 - 11:03 | 2250395 WonderDawg
WonderDawg's picture

LOL Uh, he's asking you to stop screaming, in Pig Latin.

Tue, 03/13/2012 - 11:12 | 2250439 ekm
ekm's picture

Ok. Sorry.

Tue, 03/13/2012 - 11:14 | 2250441 ekm
ekm's picture

A lot of mental cocaine on Zerohedge.

Tue, 03/13/2012 - 12:06 | 2250604 francis_sawyer
francis_sawyer's picture

Do Italian swine speak "pig latin"?... Just asking...

Tue, 03/13/2012 - 10:56 | 2250360 pods
pods's picture


Note to self: Buy keyboard cover.

Tue, 03/13/2012 - 11:19 | 2250460 ekm
ekm's picture

I apologize. I'll try to remember not to use capitals for the whole post.

English is a bastand language anyway.

Tue, 03/13/2012 - 11:29 | 2250498 ekm
ekm's picture

Well, you you need one or two guys here to cause some fun. Everybody seems to be grumpy.

Wed, 03/14/2012 - 07:19 | 2253315 Raging Debate
Raging Debate's picture

Hear. Hear on fun. A sense of humor regarding the chaos and stupidity is welcome. Uncapped of course :)

Tue, 03/13/2012 - 10:09 | 2250191 Chicago bear
Chicago bear's picture

Trying to get a commercial loan the past couple days is like shouting into the wilderness. "Come get some yield!" "Naaaa."

Tue, 03/13/2012 - 10:14 | 2250212 espirit
espirit's picture

Everybody's wise to the debt default game.

Borrow all you can, then say "piss off" to the creditors.

Tue, 03/13/2012 - 10:35 | 2250285 IndicaTive
IndicaTive's picture

Citi just loaned me 10k interest free for 18 months so I can get me some more silver.

Tue, 03/13/2012 - 10:57 | 2250367 pods
pods's picture

Well technically they didn't loan you anything, but I catch your drift.

Tue, 03/13/2012 - 10:09 | 2250193 SillySalesmanQu...
SillySalesmanQuestion's picture

Thou shall not have any volitility or panic...

Tue, 03/13/2012 - 10:10 | 2250196 Chappy
Chappy's picture

Doesn't a 16% VIX correlate to 1% daily moves in the market?  Given the ~0.5% moves lately it makes senjse that the VIX would head down.

Tue, 03/13/2012 - 10:11 | 2250197 Flakmeister
Flakmeister's picture

Don't worry, it'll all work out in the end....

Tue, 03/13/2012 - 10:12 | 2250204 Silverhog
Silverhog's picture

Feds have embalmed the stock market. It's numb to the touch, nothing resembling a real working exchange anymore.

Tue, 03/13/2012 - 10:16 | 2250219 espirit
espirit's picture

But, but the Fed is still yelling "clear" and applying the defib paddles.

Tue, 03/13/2012 - 10:21 | 2250239 espirit
espirit's picture

See the bottom chart...

There's still juice in the body, lol.

Tue, 03/13/2012 - 10:16 | 2250218 Frastric
Frastric's picture

The DOW may make it to 14000 and a bit above, but it has NEVER reached 15000, somehow things always wrong when it reaches 14000. Happened in the Dot-com bubble, and it happened in the credit bubble, and it should happen in the central banking intervention bubble.


Tue, 03/13/2012 - 10:17 | 2250222 Chappy
Chappy's picture

So how do we execute this trade of long term volatilitry vs short term?  Buy VXX and short Vxy?

Tue, 03/13/2012 - 10:18 | 2250228 tekhneek
tekhneek's picture

Anyone have any other recommendations besides UVXY? I just can't help but load up when I see a picture like this...

Tue, 03/13/2012 - 10:24 | 2250253 espirit
espirit's picture

1. Get out.

2. Ignoring Rule #1, buy VIXY at your own risk.

Tue, 03/13/2012 - 10:25 | 2250259 tekhneek
tekhneek's picture

I'm not going all in, not even close, this is just a tiny bet compared to most. Thanks though.

Tue, 03/13/2012 - 11:03 | 2250394 JPM Hater001
JPM Hater001's picture

Can you guys get a room?

Tue, 03/13/2012 - 12:00 | 2250594 Agent P
Agent P's picture

LOL...Just the tip honey, I promise.

Tue, 03/13/2012 - 10:37 | 2250295 TradingJoe
TradingJoe's picture

Smallies ahev always been a better "sign" fo things to come, try TZA!

Tue, 03/13/2012 - 11:58 | 2250585 Agent P
Agent P's picture

Down 7.25% at present vs. TVIX down I missing something here?

Tue, 03/13/2012 - 10:20 | 2250233 Fix It Again Timmy
Fix It Again Timmy's picture

This is not your father's market...

Tue, 03/13/2012 - 10:23 | 2250246 tmosley
tmosley's picture

"I love it when a central plan comes together."

-Benjamin "Cannibal" Bernanke of the B-Team

Tue, 03/13/2012 - 10:23 | 2250247 Silveramada
Silveramada's picture

And for sure tomorrow Ben babyface will say moderate recovery in place in the US...

Tue, 03/13/2012 - 10:23 | 2250251 SheepDog-One
SheepDog-One's picture

Of course theres no volatility when the FED central banksters have a white knuckle grip on total market control.

Tue, 03/13/2012 - 10:28 | 2250267 espirit
espirit's picture

SkyNet has placed an imaginary force-field around the leaky dam.

Yes, it's 5 O'clock somewhere....

Tue, 03/13/2012 - 10:23 | 2250252 The Axe
The Axe's picture

market broken.....who cares...

Tue, 03/13/2012 - 10:25 | 2250255 BandGap
BandGap's picture

Finally, some good news! The VIX is just a quiet canary in the coal mine now.


Tue, 03/13/2012 - 11:04 | 2250404 JPM Hater001
Tue, 03/13/2012 - 10:26 | 2250260 Alex Kintner
Tue, 03/13/2012 - 10:27 | 2250262 monopoly
monopoly's picture

Bought the VIX last week thinking it would be an easy winner. Cost me 10% before I bailed. Should have known America is Shangri-La.

Tue, 03/13/2012 - 10:35 | 2250278 ebworthen
ebworthen's picture

You are betting on reality and sanity, whlile the rest of the table and the house are betting on perception and fantasy and the roulette wheel has magnets on each number that suck the ball to the lowest wager on the table.

Tue, 03/13/2012 - 10:49 | 2250274 slewie the pi-rat
slewie the pi-rat's picture

well, this is follow-up to tyler's xlnt piece yesterday about the steepness over the time-gradients of the volatility indices


As If There Was No Risk Tomorrow: Complacency Hits Record As VIX Craters   Submitted by Tyler Durden on 03/12/2012 - 10:07


everything is screwed down pretty tight, derivative-wise, still and the options (derivatives) these vol.indices are based upon ain't doin a whole lotta nuttin, recently;  the puts haven't done well and as the "market has floated upward", the clock has been running on them, too, so they're dying not from fast, giant pricing increases, but by water torture while daBoyz clear some accounts re greek debt and the patience of theGodsb4HurlingThunderboltz is needed here

it looks like the pineappleExpress has arrived with rain for the whole week, so where is my pink umbrella? 

Tue, 03/13/2012 - 10:35 | 2250286 rosebud
rosebud's picture

Blame it all on the Fed

Tue, 03/13/2012 - 10:36 | 2250288 TradingJoe
TradingJoe's picture

Ohhhh gettin' giddy :)) but have to be disciplined and put 1/2 in PHYZZZ and 1/2 in TZA! VIX products are so fucked, contango, NAV's going ape...oh no, TZA, the smallies will do the trick!

Tue, 03/13/2012 - 10:46 | 2250327 Jake88
Jake88's picture

Why would anyone ever consider playing at this casino. As long as Corzine runs free theft is legal.

Tue, 03/13/2012 - 10:56 | 2250333 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Is this the tide pulling out before the tsunami, or did Grandpa forget to refill the pool?

Tue, 03/13/2012 - 10:53 | 2250355 lubyanka
lubyanka's picture

Thoughts on TVIX?

Tue, 03/13/2012 - 10:58 | 2250374 Chappy
Chappy's picture

TVIX is a piece of crap, beware.  Last i looked it's trading at a high premium to NAV.  UVXY may be better but it just split 6:1 and is getting hammered... These volatility ETF's go down a lot more than up. 

Tue, 03/13/2012 - 10:56 | 2250365 mrktjunkie
mrktjunkie's picture

Tyler, how do I pull up the VIX term structure/calendar spreads on my Bloomberg terminal? are you determining the "steepness" of the curve?

Tue, 03/13/2012 - 10:58 | 2250372 LarryDavis
LarryDavis's picture

Stock markets around the world have regained momentum this year and are likely to continue a gradual upwards climb the rest of the year, leading investors told CNBC.

Tue, 03/13/2012 - 11:09 | 2250427 writingsonthewall
writingsonthewall's picture

"Stock markets around the world have regained momentum this year and are likely to continue a gradual upwards climb the rest of the year, leading investors told CNBC."


Investors claiming market momentum upwards? - what self-promoting crap.


At best they have been flat - even with the Government stimulus.

Tue, 03/13/2012 - 10:59 | 2250379 LarryDavis
LarryDavis's picture

U.S. retail sales recorded their largest gain in five months in February as Americans snapped up motor vehicles and bought a range of goods, even as they paid more for gasoline, government data showed on Tuesday.

Tue, 03/13/2012 - 10:59 | 2250380 LawsofPhysics
LawsofPhysics's picture

As I said yesterday "It will go much lower".  Puts anyone?

Tue, 03/13/2012 - 11:07 | 2250417 writingsonthewall
writingsonthewall's picture

This is like closing your eyes on the freeway because you haven't had an accident in ages!



Tue, 03/13/2012 - 11:29 | 2250494 hangemhigh77
hangemhigh77's picture

It is illegal for the market to go down.  It is also illegal to think that the market might go down. The color red is also illegal.  

Tue, 03/13/2012 - 11:31 | 2250503 hangemhigh77
hangemhigh77's picture

It is also illegal to not believe government data. In the event you have a child it's middle name must be "Government". If a mail truck delivers mail you must upon seeing the truck get on your knees and praise the government.

Tue, 03/13/2012 - 11:33 | 2250508 hangemhigh77
hangemhigh77's picture

The VIX has been renamed, the "FIX"

Tue, 03/13/2012 - 11:43 | 2250550 davinci7_gis
davinci7_gis's picture

Wow..Over a million shares of VXX just got bought at around $21.50

Tue, 03/13/2012 - 11:51 | 2250571 dvsteenk
dvsteenk's picture

it's all about Opex, they have to reach their targets and burn all non-insiders who took seemingly "rational" positions in VIX, ETF, Futures, Stocks, FX


Tue, 03/13/2012 - 12:22 | 2250635 devo
devo's picture

Well, because everyone knows the FED et al will backstop the market. There really is no risk.

Tue, 03/13/2012 - 12:49 | 2250752 odatruf
odatruf's picture

So maybe I am wrong about this, but as I understand it, the volatility indexes are not only an indication of how much markets move in the short term, but also how much people expect them to move in the middle term.  So it represents some ratio of volatility now compared to expected volatility in the future.  If that is true, could it not be the case that a rather low / level VIX simple means that people expect the gyrations of today to be not that big of a deal relative to the risk of much larger gyrations in the future?  If so, doesn't that make absolute and eerie sense?

Tue, 03/13/2012 - 18:29 | 2252109 Dr.Engineer
Dr.Engineer's picture

Ok.  This can't last.  I'm new to betting that the VIX will go up.  How is that done (my contrarian nature is taking over)?


Tue, 03/13/2012 - 19:37 | 2252280 bluebare
Tue, 03/13/2012 - 18:47 | 2252136 bluebare
bluebare's picture

I have some oversized positions in PMs, too, but in this environment, this zh'er also likes to trade complacency news that has "five year lows" in the headline.  "Twelve year lows," would be better, of course, and I hope everyone reading this will capitalize on that moment if it occurs.  I went from a 10% starter to 20% second step position in VIX today.  80% of the capital dedicated to this trade awaits a deeper, longer misguided complacency.  The oblique opening and closing references to the earlier article containing the phrase "premature exhuberation" in the headline are willful and salaciously intended.

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