By Lawrence G. McMillan
We have been cautioning about a potential increase in implied volatility ($VIX) for some time. However, $VIX has essentially refused to move higher. In fact, it’s in a distinct downtrend ever since $SPX began the latest rally from about the 7300 level. We are not alone in our opinion, which is perhaps one reason why volatility has remained low: “everyone” is all set with long $VIX calls or long $SPX puts, waiting for the volatility explosion, and the majority is often wrong.
In any case, consider the chart above, which is a repeat of the one we published a couple of weeks ago. It shows that $VIX generally makes its yearly low in July and then increases into a volatility apex in October. Of course, not every year follows that pattern, but in general most of them do...
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