The recent tech selloff, particularly concerns surrounding DeepSeek, has led to a significant increase in stock market volatility, as reflected by the VIX's sharp rise. Despite this spike, the VIX futures curve remains relatively stable, indicating that while there is immediate market uncertainty, investors are not overly concerned about long-term volatility. This divergence between the VIX spot and futures is common during periods of heightened risk, suggesting that the current market fears may be more about short-term liquidity issues rather than a broader market panic. The situation draws parallels to the late 90s dotcom bubble, where short-term volatility spiked but did not reach the extreme levels of past downturns.
The ProShares Trust Ultra VIX Short Term Futures ETF (UVXY) has experienced a substantial increase, climbing 16.55% to $20.77 as of 9:00 AM on Monday, January 27.