Goldman Sachs Forecasting a Surge in VIX and Strategies for Investors
Thursday, 14 March 2024, 19:30
About the Forecast
The VIX is jumping today as stock market slump but analysts at Goldman Sachs think it could rise much further from here. The volatility index offers a good hedge on stock markets as it rises exponentially as equities fall.
Rationale for VIX Buying
- Historically Low VIX: With VIX at a historically low level, it presents an opportunity for investors to consider VIX calls.
- SPX All-Time Highs: SPX close to all-time highs warrants a precautionary approach for investors.
- Model Estimations: Goldman Sachs' volatility model projects an average of 21.5 on the VIX in April, indicating potential upside risks.
Goldman Sachs suggests VIX buying as a suitable hedge amid the macro environment and upcoming catalysts that could influence market movements.
Proposed Strategy
- Investors are advised to consider VIX April monthly expiry $16 calls for hedging purposes.
- Market conditions such as upcoming analyst days, earnings season, and macro events are likely to drive volatility higher.
While the forecast is bold, the recommended strategies aim to address the looming market uncertainties.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.