Sleepy summer markets could be getting ready to give way to something more violent this fall.
While the ultra-low VIX may be reflecting a calm stock market, futures on the VIX show investors fear there increasingly could be trouble brewing down the road.
The VIX futures curve is at the steepest level since before the financial crisis began, with each progressing month at a higher and higher level with longer term volatility at a much higher premium than short-term volatility.
The VIX, itself, is the market’s fear meter and it is also trading at a pre-financial crisis level, hitting a low of 13.71 last week. On Thursday, it was at 14.40, down slightly on the day, but down 24 percent since the beginning of August. The VIX is based on a weighted average of the implied volatility of options on the S&P 500 that trade on the Chicago Board of Options Exchange. The falling VIX has added to the steepness, but traders say the steep levels are unusual.