Wall Street’s “fear gauge” is currently at its highest level of the last six months amid growing market uncertainty and rising geopolitical tensions.
Traders in the U.S. are reportedly on edge as the CBOE Volatility Index, or VIX, which represents the market's expectations for volatility over the coming 30 days, hits a new peak.
At the same time, stock options worth $2.5 trillion U.S. are set to expire in coming days, which could further fuel market volatility.
Of the $2.5 trillion U.S. in option expirations, $1.7 trillion U.S. are tied to the benchmark S&P 500 index.
Large option expiration days typically lead to a flurry of trading activity that can spillover into the broader market and lead to extreme volatility for stocks.
The VIX, often referred to as Wall Street’s “fear gauge,” is now at 21, its highest level since March 24 of this year, according to data from FactSet.
That puts the fear gauge above its long-term average of 19.6. It also marks the first time the VIX has closed above 20 in 101 trading sessions, ending the longest such stretch since 2018.
Analysts say that the rising VIX could be a sign of a coming downturn in the stock market.
Rising bond yields are also making professional traders nervous, with the yield on the 10-year Treasury near 5%, a 16-year high.
