The Cboe Volatility Index (VIX) has risen above 22 for the first time in four months, largely due to a sell-off in AI-related stocks, which has raised concerns among investors. Notably, a significant number of trades have been made in November VIX call options, indicating that traders are betting on the VIX remaining elevated.
One trader purchased 9,200 calls at a $20 strike for $1.7 million and 12,500 calls at a $23 strike for $1.1 million, anticipating the VIX will exceed 23 by mid-November. Brent Kochuba, founder of SpotGamma, noted that the rapid increase in the VIX and the high volume of VIX options trading suggest that traders are rolling over positions to hedge against a larger market downturn.
The Nasdaq experienced a 2% decline, marking its worst day since June 5, with CoreWeave, a neo-cloud provider, dropping 13%. On Friday, nine of the top ten VIX contracts traded were calls, with a total premium of nearly $27 million, representing about 36% of the day's total VIX options premium.
The market is poised for a critical week ahead as major companies like Tesla, SpaceX, and Meta are set to report earnings, which could further influence market volatility