A surge in VIX call buying last week has proven beneficial for traders seeking protection against market volatility. The increased open interest in VIX calls, flagged by Cboe Global Markets, reflects a heightened demand for volatility hedges amid a backdrop of significant market events, including Donald Trump's comments on tariffs and immigration, the FOMC rate decision, and a busy earnings week. This uptick in call skew suggests that traders were anticipating increased 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. As of 11:51 on January 27, the VIX stands at 19.17, up from its last close of 14.85, reflecting the recent volatility in the market.