VIX: Sentiment Says Stocks Will Rise- Is it Wrong?

The VIX index reflects the implied volatility of put and call options on the stocks in the S&P 500 index. Implied volatility is the consensus expectation of future price variance. Since options are price insurance, market participants purchase puts and calls during bearish periods and sell the options when prices head higher. The price action in the VIX signals that the stock market bull will continue to charge higher. 

In an August 29 Barchart article, I asked if the VIX was too low or too high. In that piece, I wrote, “The economic and political factors facing markets remain why the VIX will stay elevated, and the odds favor higher instead of lower levels for the volatility index for as far as the eye can see.”