Cboe VIX Rises as S&P 500 Rallies on Record Call Volume

The Cboe Volatility Index (VIX) rose alongside a 1.8% rally in the S&P 500 on Tuesday, defying the typical inverse relationship where volatility drops as stocks rise. This uncommon movement, occurring in approximately 20% of market scenarios, was propelled by exuberant call buying in a rapidly advancing market.

Cboe Global Markets reported a record volume of more than 4 million S&P 500 index calls traded on Tuesday. During this period, the put-to-call ratio fell to 0.83, marking the second lowest reading on record. Demand for call options on the Nasdaq 100 also surged, with prices jumping 42%, the largest single-day increase in five years.

This extreme demand drove up option prices and implied volatility, which kept the VIX elevated despite the bullish market trend. The trend reversed midday Wednesday, as both stocks and the VIX declined.