The CBOE Volatility Index (VIX) is currently underpricing the potential for a global equity rally driven by tariff relief, according to a recent report from BofA Global Research. As of January 22, 2025, the report highlights that options markets are not fully accounting for the positive impact of easing trade tensions, particularly in light of the new U.S. administration's policies. "Equities hopeful but still cautious on tariffs; options are underpricing the potential that tariff relief will lift all boats," BofA analysts note. The VIX for the S&P 500 has decreased to 13.5, down 2.3 points week-over-week, indicating a reduction in perceived market risk. BofA suggests that investors consider positioning for a coordinated global equity rally through options, as the policy cycle remains in its early stages. The report also recommends owning German gamma into upcoming elections and exploring hybrid strategies that overestimate equity-rates correlation, offering significant discounts compared to vanilla alternatives.