CBOE Volatility

Today's sudden 'Minsky Moment' in markets has pushed US equity risk perceptions to their highest relative to Europe since August 2015, back to old 'norms'.

As Bloomberg notes, U.S. politics are taking center stage as risks recede in Europe following the French presidential election. With Donald Trump facing the deepest crisis of his presidency, the CBOE Volatility Index surged on Wednesday, while Europe’s VStoxx Index rose less than 5 percent.

Three weeks ago we introduced the real "50 Cent" - the mystery trader whose pattern of huge, near-daily trades on the VIX is turning heads in the options market.

Not him..

As we detailed previously, Pravit Chintawongvanich, head of risk strategy at Macro Risk Advisors,  the huge options buyer known as "50 Cent" shows no signs of slowing down.

While US stocks were relatively stable last week (amid death-feying BTFD rips), investors are paying the most for equity protection since before the U.S. presidential election in November.

 As Bloomberg reporets, Credit Suisse's Fear Barometer, which measures the cost of bearish to bullish three-month options on the S&P 500 Index, has climbed for six straight days, its longest streak since August.

Following weeks of utter comaplcency, there are signs that investors are beginning to hedge for potential U.S. stock swings around France’s presidential ballot.

As Bloomberg writes, futures on the CBOE Volatility Index
expiring in the next month are now trading around the same level as
contracts maturing a month later.

In fact the VIX term structure briefly inverted on Monday...

One glance at the shocking headlines over the first quarter of 2017 and one would imagine intense volatility in the world's capital markets - from the leader of the free world being 'managed' by Putin to North Korean Nukes; and from Fed rate hikes to the rise of populism in Europe. But that would be entirely wrong - Q1 2017 was the calmest for US stocks since 2006...

Just a week ago, it looked as if the dormant CBOE Volatility Index was awakening.