Mallow09 ری ٹویٹ کیا

A useful tool I use to spot when the market is due for a breather, or due for a bounce.
Top panel is $VXV divided by $VIX. In plain English: 3-month volatility divided by 1-month volatility. It tells you how the options market is pricing the short term relative to the medium term.
Here's how I use it:
When the ratio gets above 1.20, that means back month vol is more than 20% above front month. The short term has gone quiet and the market is usually feeling pretty comfortable. That's when I start preparing for a consolidation or pullback.
When it drops below 1.00, front month vol has spiked above back month. Short-term fear is getting priced in. That's when I start preparing for a bounce or sideways chop.
We're sitting at 1.18 right now with the SPX at all-time highs. Not in the zone yet, but close enough that it's on my radar.

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