VIX Futures Rise Ahead of November US Midterm Elections on Volatility Concerns
Summary
- Investors are increasingly positioning for broader stock-market volatility ahead of the US midterm elections in November.
- VIX futures are rising from about 17.4 in September to 19.7 in November, reflecting the potential for greater market volatility around the midterm elections.
- The options market tied to the midterms is pricing in a move of about 1.4% in the S&P 500 index the day after the vote, heightening caution over a pickup in short-term volatility.
Forecast Trend Report by Period
Investors are increasingly 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 approaches.
Walter Bloomberg reported on August 25 that VIX futures are climbing from about 17.4 for September to 19.7 for November. The move suggests US equity traders are bracing for increased market volatility around the midterm elections.
Data from Cboe show stock-market volatility rose in 80% of years with midterm elections since 1945.
The options market tied to the midterms is pricing in a roughly 1.4% move in the S&P 500 the day after the vote. That has added to concerns that the election outcome could amplify short-term volatility in equities.
JH Kim
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