New McMillan Article at Proactive Advisor Magazine

Lawrence G. McMillan's recent article titled Understanding the $VIX Futures Term Structure was recently picked up and published at Proactive Advisor Magazine. Read the full article by clicking the link below:

There has been a lot of discussion in the media about how cheap the $VIX (CBOE Volatility Index) is. These articles relate a bearish connotation for stocks, mistakenly asserting that an upward-sloping term structure in the $VIX futures is a negative factor. I have seen the same opinion expressed many times on CNBC by traders who should know better.

People make this incorrect assumption because they think futures prices are predicting something. That’s not the case most of the time. Just because the current May $VIX futures contract is trading at 16.60, and the September (2016) $VIX futures are priced at 20.15, it doesn’t mean that futures traders are predicting that $VIX will be 20 by September. But once one makes that incorrect assumption, then the conclusion is that $VIX is going to be higher by September. Thus, the argument goes, stock prices are going to be lower (since they generally move in the opposite direction of $VIX).

These statements are far from the truth. An upward-sloping term structure is a natural byproduct of a bullish market...

Proactive Advisor Magazine: Understanding the $VIX futures term structure