It was a good year to bet on volatility.
The CBOE Volatility Index, or VIX, is up nearly 60% this year and counting as President Trump and his cronies destabilize the world order by firing missiles at Iran, and continued market confusion over whether the administration’s tariff policy is legal.
The VIX, known as a gauge of market volatility, rises when things are turbulent and falls when things are calm. It measures expected market volatility over the next 30 days, and rises when the broader market falls. The VIX is calculated based on the price of options on the S&P 500, so when investors expect a big change in stock prices, the price of options rises and the VIX rises.
While the VIX has been a less reliable gauge of volatility recently, when it rises so quickly, and in such a short period of time, it’s worth noting.
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Investors see when the index falls below 30, it’s a sign that things are, well, unstable. The last time it came out was in April of last year, when President Trump unleashed the US by imposing sweeping tariffs that have since been overturned by the Supreme Court.
With President Trump’s recent comments that the federal government doesn’t really have a second-day plan for war, the market will continue to heat up significantly. “I think the worst case would be that we do this, and someone takes over who’s just as bad as the last guy, right?”
That’s the kind of statement VIX traders like to hear. As the Iran war escalates, and global energy supply chains close, the VIX is expected to continue to rise.
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