The recent surge in VIX call buying has highlighted traders' growing demand for volatility hedges amid significant market events, such as Donald Trump's tariff and immigration comments, the FOMC rate decision, and a busy earnings week. This increased open interest in VIX calls, as reported by Cboe Global Markets, suggests that traders were bracing for heightened market turbulence. Despite the initial spike in the VIX, which reached 22 overnight, the index has since retreated, indicating a potential stabilization in market sentiment. Brent Kochuba from SpotGamma noted the presence of 0DTE put selling in the S&P 500, suggesting that traders are betting on reduced downside risk and a possible market rebound.
The ProShares Short VIX Short Term Futures ETF (SVXY) experienced a notable decline, dropping 3.95% to $50.05 at 12:00 PM on Monday, January 27.