This Unusual Link Between Stocks and Volatility Says the Turbulent Times Aren't Over
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The rebound in S&P 500 Index futures from a 5 percent drop Monday could be seen as a sign that the stock market is still recovering from its wounds, but a closer look at the curve of volatility futures shows it may still need intensive care.
Since stocks started tumbling on Feb. 2, a close relationship has developed between the active S&P 500 futures contract price and the spread between first and second-month VIX futures contracts. This correlation only appears during turbulent times.