Geopolitical tensions, particularly the ongoing US-China trade review, have contributed to a decrease in market volatility, as evidenced by the CBOE Volatility Index (VIX) closing down 1.13% at 14.85. This decline in the VIX suggests a slight reduction in expected market fluctuations, with projections of less than 1% daily movement in the S&P 500 over the next month. The technology sector, sensitive to trade policy shifts, has been notably impacted, adding to investor caution. Despite the reduced volatility, significant trading activity was observed in VIX options, with the VIX Feb 2025 15.000 put seeing a volume of 27,235 contracts, indicating ongoing hedging strategies amid the uncertain geopolitical landscape.
The ProShares Trust Ultra VIX Short Term Futures ETF (UVXY) closed at $17.82, down 1.16% for the day, and currently stands at $17.90, reflecting a 0.72% decrease from the previous close.