Volatility Spike

Dated events

1. Aug. 24, 2015 · Flash crash at the US open as VIX hits 53 on China growth fears
   Stock prices around the world fell sharply at the opening bell after worries about China's slowing economy built up over the weekend, and the fear gauge briefly hit its highest level since the 2008 financial crisis. Funds that had been betting on continued calm were caught off guard and had to rush to adjust, which made the price swings even wilder. Markets partially recovered within days, but the episode revealed how crowded the 'bet on calm' trade had become.
2. Feb. 5, 2018 · Volmageddon: VIX has record one-day rise as short-volatility bets unwind
   Bets that had profited for years from calm markets suddenly collapsed as a fear gauge (the VIX) spiked to levels not seen since 2015, forcing those bets to unwind all at once. This mattered because the unwinding created a chain reaction: funds that had bet on calm had to buy massive amounts of protection at the worst possible time, which pushed stock prices down even further. Within days, two popular products that let people bet on calm markets were shut down permanently.
3. Feb. 6, 2018 · Credit Suisse announces it will end its XIV note after a 96% one-day loss
   Credit Suisse announced it would close its popular XIV note, a product that let everyday investors bet that markets would stay calm, after it lost almost all its value overnight. The shutdown showed ordinary people that products tied to complex bets on market calm could essentially go to zero in a single day. The event led regulators and banks to rethink whether such products should be sold to regular investors.
4. March 16, 2020 · VIX closes at a record 82.69 as COVID-19 lockdown fears grip markets
   As countries announced lockdowns to fight COVID-19, stock prices fell so fast that trading was automatically paused, and the fear gauge hit levels never recorded before. Anyone still holding bets that markets would stay calm was wiped out, and the forced unwinding of those positions made the drop worse for everyone else. The Federal Reserve stepped in with emergency actions to try to keep financial markets functioning.
5. Aug. 5, 2024 · VIX briefly tops 65 as yen carry trades unwind and US recession fears rise
   A surprise interest-rate increase by Japan's central bank caused a massive unwinding of trades where investors had borrowed cheap Japanese yen to invest elsewhere, and the fear gauge spiked to levels not seen since the early COVID panic. The rush to close these positions forced selling across global stock markets, especially in technology shares, because everyone was trying to get out at the same time. Within about two weeks, prices had largely recovered as the panic faded.

Assets named in this scenario · 4

Gold · Gold FuturesInvesco QQQ Trust (Nasdaq-100)iShares 20+ Year Treasury Bond ETFSPDR S&P 500 ETF Trust

Recently triggered by news

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