On Thursday, the Cboe Volatility Index (VIX) experienced a notable increase, rising by 5.7 points to over 28, marking its highest level since March 31. This surge occurred as the S&P 500 fell by 3%, leading to discussions among traders about the implications of such volatility.
Noel Smith, a trader, suggested that while his data indicates a need to reduce risk, the current market conditions could present a dip-buying opportunity. He noted that the macroeconomic factors, such as oil prices and interest rates, remain stable, implying that the market's reaction is more about liquidation than broader economic concerns.
Additionally, the VanEck Semiconductor ETF's decline of 3% on Wednesday coincided with a rare drop in the VIX, indicating that traders may have underestimated the market's volatility. With nearly 800,000 calls on the VIX traded, significantly above the average, it reflects a growing sentiment among traders that the market may be more volatile than currently indicated