We have had big fluctuations in volatilities since the October sell off started last year. The initial move in October had the VIX index spike massively, and it was all exaggerated in late December, when poor liquidity took the market by surprise. 

In January the VIX index started coming off, and gave back the entire move from autumn. After that we had the smaller, but still aggressive pop higher in VIX when the China/US/Huawei situation once again managed freaking out investors. 

VIX is now once again down to some sort of support that has held since 2018. Currently nothing seems to be going on, and people are leaving for vacations, but possible geopolitical issues could arise whenever.

Do not forgot we have earnings coming up soon, as well as the Fed “dilemma” still very much present.

Realized volatility is low these days and VIX could go lower, but that seems a marginal trade at these levels. 

Low volatility eventually feeds into people’s VaR, and results in people being more comfortable taking bigger risk, “hey nothing is moving so we will taker on more risk”.

This goes both for the portfolios of the big books as well as the smaller retail players, but what people tend to forget is that low volatility now does not mean it needs to stay. 

Currently there are no big “issues” to consider into the current narrative, but with VIX approaching the 12 level, there is little room for anything outside of the consensus view to happen. 

We would actively start looking at various options play that will benefit from rising volatility.