Volatility Ahead – VIX Index Surges as September Begins

The I Know First September 3rd AI algorithmic prediction was successful in foreseeing that VIX index would surge on this trading day and until today. In reality, the index went up by almost 26% on Thursday to 33.6, and slightly declined to 30.75 on Friday. It’s value remains higher than it’s closing value on Wednesday – around 26.

Source: Yahoo Finance

As more and more uncertainty about the future economic activity rises due to Coronavirus implications and new lock-downs worldwide triggered by the second wave of patients, the VIX predictions lead its way to the top of I Know First’s forecast heatmap (which included more than 70 assets) in the Coronavirus stock market opportunities package. The below is the VIX related extract from the forecast dated September 3rd (before market opening):

I Know First VIX index Forecast dated September 3rd 2020
I Know First VIX index Forecast dated September 3rd 2020

As the market is overheated at the moment, there are a few theories on what actually could have caused it. According to first theory, the extreme demand for bullish call options to bet on further gains in megacap tech sector by SoftBank was fueling price appreciation. A second theory claims that the economic uncertainty from the COVID-19 pandemic, and the possibility of a delayed vote count due to a large number of mail-in ballots has also unsettled some investors and caused more uncertainty. Also, the VIX index is priced on short-term option purchases in the S&P 500 options. As a result, another theory suggests that investors started to hedge the recent gains in their portfolios in order to secure recent extra gains. This would be a prudent move during the massive rebound in stocks.

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