Daily Options Report

So when last we checked in with the VIX Sonar, Futures premiums were high and OTM call buyers were rampant.

Now?

VIX options volume is drying up. And as we noted yesterday, futures premiums are drifting, though still at premiums.

When the VIX futures were high and the world wanted to own calls, a large segment of the punditry came to the erroneous conclusion that this was all smart money and the VIX would soon soar. Which they took to also mean the market would tank. Neither happened of course. The analysis was very wrong imho in that they were taking a sentiment indicator designed as a contra signal (High VIX = High Fear = Bullish) and assuming it instead was now a window into smart money. Why? Because anyone who bought the VIX on a vaguelly similar setup in 2008 was in fact very smart money ahead of the Lehman Fall.

To me, this is now a more bullish setup for the VIX and bearish for the market. It's disinterest, it's complacency. Or at least its headed in that direction. Of course ideally we'd see the VIX taking at the recent lows and VIX Futures premiums evaporating. All we have now really is just lack of interest in VIX calls.

Again though, true complacency is not here yet, and even it was, it's not a great market timer. But if you're looking to All Things VIX for guidance, it is starting to head down a path more suggestive of a bottom (in volatility).