![\"VIX,](\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2026\/09\/image-6.png\")
<\/figure>\n\n\n\nSource: Interactive Brokers<\/em>. Past performance is not indicative of future results. <\/p>\n\n\n\n One reason for the persistently low level of VIX has to do with the persistently low levels of correlation and high levels of dispersion within the S&P 500 (SPX). Remember, VIX uses SPX options with an average time to expiration of 30 days as the basis for its calculation (and nothing explicitly involving sentiment). When the index\u2019s components move in opposite directions, that dampens the index\u2019s volatility. When they move in synch, those moves tend to seem amplified. Since correlation and dispersion can be generally thought of as inverse measures (not mathematically, per se, but in a general sense), high levels of correlation tend to correspond with low levels of dispersion, and vice versa.<\/p>\n\n\n\n When correlation measures, like the Cboe 1-Month Implied Correlation Index (COR1M), are low, and\/or dispersion measures, like the Cboe S&P 500 Dispersion Index (DSPX), are high, that tends to suppress SPX volatility, and thus the perceptions of future SPX volatility measured by VIX. We recently saw COR1M at a multi-year low and DSPX at a multi-year high. Thus, it was hardly surprising to see VIX bouncing along near the low end of its longer-term trading range, as noted above. <\/p>\n\n\n\n Yet something interesting is occurring. Although COR1M has risen notably and DSPX has fallen quite sharply in recent sessions, VIX has remained at relatively low levels. Given their relationship with index volatility, one should expect to see VIX firming up. Certainly, it bounced off its lows during the declines of the past couple of days, but it seems to be lagging the other measures. <\/p>\n\n\n\n This strikes me as a potential opportunity. Options traders still seem to be in summer mode, thus expecting low volatility to persist. Part of this is the nature of the business \u2013 options traders hate spending money on decaying options until they absolutely must. Thus, many of them are undoubtedly waiting until tomorrow, just before the jobs report, or, more likely, until after Labor Day to buy options that might reflect the new correlation\/dispersion metrics. Considering that VIX remains closer to a longer-term low than even its 100-day moving average and that much of the recent dispersion has been quelled, it seems like a better time to be buying VIX or SPX options than selling them.<\/p>\n\n\n\n 2-Years, VIX (purple line), COR1M (white line), DSPX (blue line)<\/em><\/strong><\/p>\n\n\n\n Source: Interactive Brokers<\/em>. Past performance is not indicative of future results. <\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" Among the most common questions that I receive involve something along the lines of \u201cwhy is VIX so low?\u201d, or \u201cwhy does VIX seem so complacent?\u201d\u00a0 My reflexive response to the former tends to be along the lines of \u201ccompared to what?\u201d, while my snarky retort to the latter is \u201cVIX is not a fear gauge, though it plays one on TV.\u201d\u00a0 There are indeed more complete answers, but they require more than a sentence or two to unpack.<\/p>\n","protected":false},"author":4,"featured_media":8064,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[145,146,147,8,12,148,7],"tags":[],"contributors-categories":[149],"class_list":["post-217625","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ibkr-market-insights","category-macro","category-north-america","category-region","category-securities","category-text-articles","category-traders-insight","contributors-categories-interactive-brokers"],"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"\n![\"2-Years,](\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2026\/09\/image-7.png\")
<\/figure>\n\n\n\n