The recent surge in VIX call buying has highlighted traders' anticipation of increased market volatility, driven by significant events such as Donald Trump's tariff and immigration comments, the FOMC rate decision, and a busy earnings week. This heightened demand for volatility hedges, as indicated by increased open interest in VIX calls, suggests that market participants were preparing for potential turbulence. Despite an initial spike in the VIX to 22 overnight, the index has since retreated, pointing to a possible stabilization in market sentiment. Brent Kochuba from SpotGamma noted the presence of 0DTE put selling in the S&P 500, indicating traders' bets on reduced downside risk and a potential market rebound.
The ProShares Trust Ultra VIX Short Term Futures ETF (UVXY) experienced a significant increase, rising 11.62% to $19.89 at 12:00 PM on Monday, January 27.