VIX Curve Inverts Again As Futures Market Interest Collapses

Just two weeks ago, everything was awesome: jobs data was perfectly 'goldilocks', stocks surged, banks loved it, and VIX flash-crashed lower - normalizing the term structure. Today... things are very different.

The market has given up on Goldilocks...

Bank stocks have collapsed since 'Goldilocks'...

And the VIX term structure has once again inverted, echoing the worst of the February Fiasco...

 

And while 'normally' a surging VIX and inverted curve would prompt a considerable pickup in VIX trading interest, the pattern since the implosion of the 'short-vol' trade has been a one-way street as while the VIX is heading for its biggest quarterly surge since 2011, the popularity of contracts tied to it is waning.

As Bloomberg notes, the number of Cboe Volatility Index futures outstanding has slumped from a record last month, with Wednesday’s expiration pushing it to its lowest reading since November 2016.

Does that explain the lack of dip-buyers in stocks?