How does this happen I noticed at the open the Vix gapped open and was up like 4% and has fallen all day but is still positive. Is this just market dynamics at work or manipulation, to keep the Vix above 10 to stay out of the news?
vix can move up (at least in the short term) with market moving up, it means people are piling into and paying to much for calls. Usually with the spiked prems the option writers (professionals) sell a boatload than tank the market within 5-10 trading sessions, having a sideways market to buy back the calls they sold today. This is short-term action tho, ultimately the market may go higher but they need an opportunity to bring in all this premium they are selling right now. (based on what I've observed they are right about 80% of the time). Regardless, the whole point is suck in the IV so even if they are wrong they dont lose as much as they should have (nor do the call buyers win as much as they should) which I still consider a win for the writer meaning alternately that they market can go sideways for 5-10 days to kill the IV in the calls.
This is like the third time in the last couple months, where I have been closely watching every tick on the VIX in conjunction with the markets. I had the same impression for the first two hours this AM. Its almost as if the VIX was acting like a leading indicator on this gap fading and being sold this afternoon. The close should be very interesting. We either push back up or maybe even go red. Several stocks are looking like traps today where in the AM put in new highs and now are completely reversing and putting in new lows. Looks like we are going red.
VIX Jan10 calls are trading below cash VIX (VIX 12.50, Jan10 calls 2.35). is this a sign of no fear in the market?
VIX options are generally like that and trade like that - when you think about it, there is no real underlying like an equity, etc. They are also different in that the final settled amount is formulated from a unique cumulative calculation.