VIX Surges Above 22 as AI Stock Sell-off Hits Nasdaq

The Cboe Volatility Index (VIX) rose above 22 for the first time in four months on October 16, triggered by a significant sell-off in AI-related stocks. The Nasdaq suffered its worst single-day decline since June 5, dropping 2%, while neo-cloud provider CoreWeave saw its value fall 13%.

Market traders are actively hedging against a broader downturn. Significant activity has emerged in November VIX call options, with investors spending millions on contracts wagering the index will close above 23 by the third week of November.

Brent Kochuba of SpotGamma noted that the speed of the VIX increase and elevated options volume suggest traders are rolling positions to protect against further market instability. Investors are now monitoring upcoming earnings reports from Tesla, SpaceX, and Meta to determine the future direction of the market.