Below is a brief excerpt transcribed from Friday's edition of The Macro Show hosted by Hedgeye CEO Keith McCullough.

McCullough: This Is How Short Sellers Get Paid - 5 1 2020 10 47 44 AM

Let's talk about the VIX.

Nothing changed. Nope.

We closed above 31 every day this week. As a reminder, VIX above 31 is a regime of volatility where investors have really struggled historically. It’s not a magical number, it’s a mathematical reality.

With the VIX at 34 this morning, my Risk Ranges show immediate term upside on U.S. Equity Volatility all the way up to 47.91.

This is where you get paid.

There are particular moments where you get paid to add to your shorts, to layer into these shorts, to make a call that people aren’t willing to make because they’re emotional and they don’t have a process.

That’s what happened this week. The immediate term downside in the S&P 500 with that VIX level will be on the order of 6-7%. That’s pretty much where the risk range is. As you know, I’ve shorted the S&P Equal Weight (RSP) instead of the SPY because SPY was a little crowded last week.

If you look at Futures and options data, you can bet that S&P net short position has most likely been burned off. We’ll have the CFTC update later today (this data gets released each Friday and with the data of the most recent Tuesday). People last week had been shorting the SPY, and obviously that hadn’t worked.

McCullough: This Is How Short Sellers Get Paid - 5 1 2020 10 46 10 AM

McCullough: This Is How Short Sellers Get Paid - cftc