Michael A. Gayed, a portfolio risk manager and a market analyst, reports that the market is preparing to hedge against the uncertainty that will hit the market in November when the US presidential elections are held.
According to him, demand for futures on the VIX index, which tracks market volatility, peaked in November, far exceeding investors’ interest in futures for the remaining months.
$VIX futures are peaking in November as uncertainty over the US election is expected to result in volatility, especially if there is a disputed result #stocks #markets #economy #investing #financialservices #trump #biden #trumphascovid Michael A. Gayed via Twitter
October's Volatility Is Rather Low
However, at the moment the situation with market volatility is exactly the opposite. According to Helene Meisler, an analyst and a columnist for DailyMoney.com, reports that over the past 10 trading sessions, the VIX put/call options ratio has almost always been greater than 1.
The put/call futures ratio reflects the market sentiment regarding the asset. If this ratio is small, it means that investors believe in a bullish trend. If the ratio is greater than 0.7-1, then this means that investors are preparing for the fall of the asset.
Nevertheless, in this case, this is more positive information, since belief in a decrease in volatility actually means an increase in confidence in market stability and the absence of sharp movements. As a rule, it is the increase in volatility that heralds a change in the trend in the market, which often brings panic to the ranks of investors.