Volatility has vanished. Hedge funds are betting the calm

Volatility has vanished. Now hedge funds are betting the calm will last, shorting the Cboe Volatility Index, or VIX, at rates not seen in three years. But such eerie calm and extreme positioning has historically foreshadowed a spike in turbulence.

Hedge funds and large speculators were net short futures tied to the VIX by roughly 92,786 contracts in the week through Aug. 19 a level last seen in September 2022, data from the Commodity Futures Trading Commission show.