VIX is lying to you
SPX makes a new local low. VIX ticks higher. Looks bearish, right?
Not so fast.
Pull up the implied vol at a fixed strike, say the 6400 put. It's flat. Actually drifting lower.
That divergence is worth paying attention to.
When spot is grinding to new lows but the vol surface refuses to reprice higher at the same strikes, someone is stepping in to sell premium at those levels. The marginal seller of volatility has appeared.
Institutional money saying "this is overdone."
VIX can stay elevated because of skew and term structure effects. It's a moving target by design. The index rolls with spot, so it captures mechanical repricing that has nothing to do with genuine fear.
Fixed strike vol strips all that out. It tells you what's actually happening to risk perception and supply/demand at a specific level.
In my experience, fixed strike vol rolling over while spot makes new lows has been one of the most reliable exhaustion signals I track. It often calls the turn before price does.
Next time VIX is screaming danger, check what the vol surface is actually doing at a fixed strike, that's where the potential signal is.
Volatility first.
Imran
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