UBS Derivatives Strategists Warn of Potential Market Volatility Ahead
UBS derivatives strategists are cautioning investors about the recent fluctuations in the VIX volatility gauge. According to their analysis, the rapid rise and subsequent rapid descent of the VIX may have been too abrupt.
As of Friday morning, the VIX was hovering just above 15. The strategists had initially expected a decrease in volatility following a cooling CPI report. However, they note that there are still lingering effects when the VIX spikes to such levels, especially amidst concerns of a looming recession.
Their models indicate a fair value range of 20 to 22 for the VIX. Despite this, they believe that the markets have already priced in these estimates, potentially leading to further convergence lower.
In conclusion, investors should remain vigilant and consider the implications of heightened volatility in the market. Understanding the dynamics of the VIX can help navigate through uncertain times and make informed investment decisions.