Curious. What in my post suggests that I don’t understand that volatility is cyclical? I’m well aware that we have had heightened volatility over the last two or three years and have had longer periods of way lower volatility than we saw so far this week. My post ended with a question in case you missed it.
If you know volatility is cyclical, which I’m sure you do, then don’t you already know the answer to your question? Maybe something is getting lost in the translation.
No, I don’t know if this is only a brief drop in volatility or if we will enter a sustained low volatility period over a longer period with the occasional spike. The latter would surprise me during these times, but I don’t know. That’s why I’m opening up this thread for discussion. What I do know is that we’ve seen days this week we haven’t seen in a long while. Maybe the summer months will actually be quiet this year like they typically are historically. As posted by @comagnum. Summer doldrum.
I vote it's a temporary pause lest the short vol trade once again get crowded and a new generation of naive traders are blown to kingdom come thinking short vol is the Holy Grail can't lose perfect trade. The question remains, how long before the inevitable? No way to predict this other than to point at the fierce macro headwinds on the horizon and say "soon".
I will vote “permanent” to facilitate a market for the thread topic. I’m being facetious but the fantastic market conditions of 2020-2022 are over. It’s back to the grind.
It is the day traders' nightmare. On 5 May 2023 Fri, the market moved massively (long blue candle). Subsequently, the market had to rest on 8 and 9 May 2023, Mon and Tue Such a pattern is quite common actually.