Not Quite Volmageddon... Yet
Not quite Volmageddon... yet
Volatility is back with a vengeance. VIX, VVIX and tech volatility are exploding higher, while the short end of the volatility curve is flashing serious stress. Yesterday's all-clear signal has turned into another painful reversal, catching complacent traders off guard. Yet beneath the surface, the picture is more nuanced. Skew remains relatively contained, implied correlations are far from extreme and sentiment has been even more bearish before. This is a market in panic mode, but not yet a full-blown Volmageddon. The risk is that increasingly complex market dynamics turn today's volatility shock into something much uglier.