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The short volatility trade is all the rage once again on Wall Street. The market’s positioning around the VIX has collapsed since the start of 2019, with net positioning at multi-year lows.

According to the CFTC’s latest futures and options report, Wall Street is now net short the VIX by -177,754 contracts.

In other words, be careful out there.

As Hedgeye CEO Keith McCullough explains in the clip above, volatility can return with a vengeance when investors least expect it.

“The main thing to remember about volatility is to never, ever expect that to be a smooth and predictable line,” McCullough explains on a recent edition of The Macro Show.

“We just had some of the most erratic moves in the history of markets and the worst December in the history of Decembers. The volatility of volatility clusters. It’s episodic and non-trending, then – boom – you have it and it comes back.”

Watch the full clip above for more.

McCullough: The Market Is Complacent On Volatility - early look