USA

Wall Street’s ‘fear gauge’ is doing something unusual. What it means

A trader works on the floor at the New York Stock Exchange (NYSE) on April 23, 2026 in New York City, United States.

Jeenah Ay | Reuters

Interesting things are happening in the options market.

S&P 500 It reached record levels on Thursday morning, but Cboe Volatility Index (VIX) It’s stuck around 20 and is up from five days ago, when the S&P was trading nearly 100 points lower.

In other words, stocks rose and so did the market’s so-called fear gauge.

Cboe Volatility Index, 1 month

VIX and S&P move together about 20% of the time, but if the “VIX up/stock up” environment lasts for more than a few days, that means a few things are likely happening on the surface of the market.

One explanation is that investors are skeptical of new rallies in stocks and are hedging against risks such as the Iran war and crude oil. If this is the case, investors need to be wary of short-term pullbacks in the index as realized volatility “catch-up” to the VIX.

Another explanation

A more bullish interpretation, consistent with what we’re seeing in options trading around earnings, is that investors are willing to buy expensive premiums on upside calls on single stocks making big moves, especially semiconductors and tech names that are leading the rise.

Total call premium VanEck Semiconductor ETF (SMH) Although the put volume is larger, it is 25% larger than puts.

Make a transaction on chip stock Marvel Technology for example. The stock has already more than doubled since last month’s earnings, but one trader paid $2.4 million to buy nearly 1,700 contracts expiring June 18 with a $180 strike, expecting another 10% rally from there.