VIX Futures Rise Ahead of US Midterms as Traders Brace for More Volatility
Summary
- Investors are positioning for an increase in stock-market volatility ahead of the US midterm elections.
- VIX futures are rising from about 17.4 in September to 19.7 in November, reflecting the potential for increased market volatility.
- The options market is pricing in a move of about 1.4% in the S&P 500 Index the day after the vote, heightening concern over greater short-term volatility.
Forecast Trend Report by Period
Investors are positioning for bigger swings in the stock market ahead of the US midterm elections in November. Pricing in the VIX futures market shows expectations for volatility to rise as the vote nears.
Walter Bloomberg reported on August 25 that VIX futures climb from about 17.4 in September to 19.7 in November. The move suggests US stock traders are preparing for greater market volatility around the midterm elections.
Data from Cboe show stock-market volatility rose in 80% of midterm election years since 1945.
The options market is pricing in a move of about 1.4% in the S&P 500 Index the day after the vote. That has heightened concern that the election outcome could increase short-term market volatility.
JH Kim
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