From Panic To FOMO: The Volatility Trap That Has Taken Over Wall Street
The volatility trap
From panic to FOMO in less than a week. VIX has collapsed from 28 to 20, short-dated hedges have been crushed and the very flows that amplified the selloff are now helping fuel the rebound. Dealer hedging, vol-control strategies and leveraged ETFs are increasingly dictating market direction. Yet beneath the volatility collapse, Nomura warns that underlying instability remains extreme, with realized VVIX volatility hitting record levels. The panic is gone, but the fragility isn't. Welcome to the volatility trap.