The $VIX is showing a case of backwardation through the Feb expiration.

The question now is will the futures market reset to a contangeo environment ahead of expiration by increasing the expectation for future volatility or will we see a volatility dump due to buying the dip activity?

(Source Vixcentral.com)

 

Taking under consideration that Jerome Powell’s first FOMC meeting begins on the same day as the March $VIX expiration and coupled with the fact the Beltway is inching closer to a lame duck period ahead of the most significant election this country has experienced in generations, I find it interesting the expectation for future market volatility in March and April is so low.

One would think heading into May-Sept months, future volatile would be priced closer to the 20 range earlier than later. Perhaps we have reached a level of complacency where we no longer fear the unknown or believe the unknown no longer warrants an appropriate hedge since most portfolios are deep in the money.  Only time will tell how this will play out. An interesting observation nonetheless.

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The $VIX is showing a case of backwardation through the Feb expiration. The question now is will the futures market reset to a contangeo environment ahead of expiration by increasing the expectation for future volatility or will we see a volatility dump due to buying the dip activity?   Taking under consideration...