Selling Volatility: Fun, Profitable, Not!
Trading in volatility has exploded. So what happens to volatility when trading explodes?
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Voilà, the Vix curve inverted.
As Bloomberg News reports on Tuesday an inverted VIX curve is rather creepy. In normal times, the term structure of the Vix, affectionately known as Wall Street's fear gauge, would be expected to slope from the bottom left to the top right, as in the green line of this chart (as it looked at the end of July. Orange is from the end of August).