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The Cboe Volatility Index (VIX) closed above 22 for the first time in four months, driven by a sell-off in artificial intelligence-related equities.
This move marks a significant shift in market sentiment, with trading data indicating that investors are positioning for further volatility. Specific options activity highlights this trend.
One trader purchased 9,200 November 18, 20-strike VIX calls for $1.7 million and 12,500 November 18, 23-strike calls for $1.1 million. These positions wager that the VIX will close above 23 by the third week of November.
Brent Kochuba, founder of SpotGamma and a CNBC contributor, stated that the rapid increase in the VIX, combined with elevated options volume, suggests traders are monetizing October positions to hedge against a larger market downturn.
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