The Significance of 30 and the VIX

I returned to the CBOE today after visiting NY and FL to discuss index options and the VIX with a wide variety of traders and investors. While on the road I read a lot on my favorite topic, the VIX, and noted a pattern in recent commentary. That pattern is the focus of many pundits on the 30 level for the VIX.

As of yesterday the VIX closed below 30 for five consecutive days. This is the longest under 30 streak for the VIX since this past summer. Remember, the VIX and S&P 500 move in opposite directions the majority of trading days and a high VIX indicates market participants are worried a drop in the S&P 500 may be on the horizon. It’s up to you to decide the significance, but keep in mind there are many other market participants out there keeping a close eye on the VIX and if it breaches the 30 level again. A VIX close above 30 may have S&P 500 bulls reassessing their thesis. Check out the chart below that shows the VIX since mid-July up to today’s price action.