Why is the VIX so low if people are still uncertain?

[noob_trad3r]

There seems to be so much uncertainty but somehow the VIX does not seem to really reflect this? or is it because people are just not buying insurance and stocks anymore as in the past?

 

[MTE]

Compared to the last year or so the VIX is low, compared to historical levels it is still pretty high.

 

[Martinghoul]

You're not alone:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aAIJo685vdz4

 

[BondTrader50]

The reason is there is much less uncertainty these days. We're in a horrible economic situation and everyone knows it.

 

[college_trad3r]

people are selling ALOT of calls. This pushes down the price of calls. Market makers who are long calls are then to hedge themselves with puts.
This pushes down the price of puts.

When a move in a direction is clear, the vix will drop!

90% of market participants is now short.

 

[dagnyt]

Quote from college_trad3r:



90% of market participants is now short.

There is no possibility that this is true.

the vast majority of 'market participants' own mutual funds, don't understand how the market works, are not capable of understanding what 'short' means.

Why do you make up such unbelievable numbers?

Mark

 

[Johno]

Quote from MTE:

Compared to the last year or so the VIX is low, compared to historical levels it is still pretty high.

And the skew reflects fear!

Regards

Johno

 

[El OchoCinco]

Quote from college_trad3r:

people are selling ALOT of calls. This pushes down the price of calls. Market makers who are long calls are then to hedge themselves with puts.
This pushes down the price of puts.

When a move in a direction is clear, the vix will drop!

90% of market participants is now short.

Wow they are really teaching bad stuff on options at college. If market makers need to buy puts to hedge this pushes down the price of puts????? You must have a different supply and demand lecture than everyone else.

When a move in a direction is clear the VIX WILL DROP?? So when the market sells off and we all know it is going lower, then the VIX drops????? DO you really believe that?

Seriously, learn about volatility, it will save you money and prevent you from making mistakes like in your post.

 

[nazzdack]

Quote from dagnyt:
.....There is no possibility that this is true.
.....the vast majority of 'market participants' own mutual funds, don't understand how the market works, are not capable of understanding what 'short' means.

1) A "small" number of professional traders can absorb the trading volume of a "large" number of retail traders.
2) True. It applies to retail AND professional traders equally.

 

[xflat2186]

Quote from college_trad3r:

people are selling ALOT of calls. This pushes down the price of calls. Market makers who are long calls are then to hedge themselves with puts.
This pushes down the price of puts.

When a move in a direction is clear, the vix will drop!

90% of market participants is now short.

Who are these people and how do you know what they're doing?