The "Volmageddon" episode happened six years ago after traders piled into a bunch of ETFs that were designed to return the inverse of market volatility (essentially betting on a calm market).
And when volatility went up in February 2018, it tanked those strategies, sending the S&P 500 down more than 10% in two weeks.
As VIX futures expire, the S&P 500 is seeing stronger price reactions.
The short-volatility trade became very popular after 2010 when volatility was low, and traders could make money betting against market turbulence.
AdvertisementIt's not a major concern right away as volatility upticks have been small, and the S&P 500 has remained resilient.
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