Three gentle 'over-complacent' reminders from the world of implied distributions of returns - i.e. the equity options market. Implied vol is its lowest relative to realized vol in six months - implying market participants are banking on a relatively well behaved market going forward relative to the last few weeks. The short-term volatility term structure is its steepest in seven months - implying that investors are as confident in short-term market calmness (and positive bias) as they have been alsmot all year. The implied skewness of options prices is at almost its lowest in five years - implying downside risk in distributions is near record high levels of complacency. Other than that, fill your boots.
Implied vol - the market's forecast for realized vol going forward (simplified we know) - is its lowest relative to the recent realized vol in six months...
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The short-term volatiluty term structure (yellow chart - lower pane) is its steepest today since mid January...indicating a very significant amount of comfort in short-term market resilience...
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The green chart below is the calibrated difference between a normal distribution of returns that is implied by options prices - the higher the number the more skewed the distribution of returns implied for the future is to the upside (and the lower the more priced in downside risks are). At the current levels, complacency is near record high levels and has again and again coincided with short-term peaks in equity markets...
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Charts: Bloomberg