The VIX, aka the fear index. It is a hovering close to 52 week lows at ~18$ (52 week lows around 14.50). Since its inception in 2007, the VIX has been a tool that has been known to see fast and furious spikes to the upside during times of panic in the markets. The VIX has yet to stay below 20$ for more than 6 months before spiking, often in dramatic fashion. Looking at some of the yearly trends below, it seems clear we are going into the calm before a storm. If the trend holds, I anticipate ~4-5 more months of calm. Surely it is possible for European woes to put a damper on that parade, but I think the most likely solutions in Europe will postpone rather than fix problems.
The VIX is an attractive buy at ~18.00, but I think it could go as low as 14$ before we see some real action. I am going to start entering into positions (6-8 month expiry) in a month or so, and if the VIX dips further in the coming months I will essentially double down on these positions. I will not be left behind the next time the VIX decides to climb the slopes.
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