Both VIX and VXN dropped on the week with bullish trends continuing in their underlying markets. However, and I like to do, it is worth mentioning that the curves steepened a bit with futures finishing the week slightly higher farther out on both curves. Something I mentioned in yesterday’s VIX options / ETP blog, but worth mentioning again is the high low range for VIX was just over a point. It was the narrowest VIX range since February of 2007. Markets tend to react like a spring after a narrow range, like the tension has to be released in one direction or another. Arguments can be made for a move in either direction. Joe Tigay from The Stutland Volatility Group noted on a VIX report this past week that next week is standard option expiration week for May, but VIX expiration comes during the following week. What he said is significant about this is that VIX often gets an extra headwind in months when VIX expiration is the week after standard expiration. If the S&P 500 rallies to new highs, do not be surprised if VIX makes a post-2008 low. Right now that low is 11.05 so with a bullish S&P 500 we may actually see a 10 handle on VIX next week. If that is the case make sure to check to see if the futures are following or the curve is steepening more.