JPMorgan’s Kolanovic Says ‘VIX Bubble’ May Spark Stock Rally
- Tallbacken cautions about lack of volatility sellers in market
- Cecchini suggests selling put options on April VIX futures
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The market’s so-called fear gauge is elevated, and that could bode well for stocks if history is a guide.
The spread between the Cboe Volatility Index, or VIX, and two-week S&P 500 realized volatility has widened to a point that historically has been followed by a volatility decline and stocks on average moving higher, JPMorgan Chase & Co. strategists Marko Kolanovic and Bram Kaplan wrote in a note Wednesday. Historically, three months after that spread moved this wide, the VIX fell 11 points and the market rallied an average 12% with a move higher 87% of the time, they said.