August 2025
Part 1: What’s Driving the False Perception That Volatility Has Changed
Amid heightened market anxiety, a growing chorus of investors and commentators are questioning whether the VIX remains a reliable measure of volatility. Echoing ABR’s February 2023 piece, Is the VIX Broken?, this series examines the persistent belief that volatility has fundamentally changed, driven by sensational headlines, structural shifts like 0DTE options, and the powerful influence of behavioral bias.
Part 2: What the Data Really Says About Volatility
Despite the incessant drumbeat from the media that the VIX no longer reflects “true” market risk, the latest data tells a different story for long-term investors. This commentary rebuts some of the most common misconceptions, from “the VIX is too low” to “dealer gamma hedging and 0DTE options are having a major impact on the VIX,” and demonstrates that the VIX remains a reasonable measure of implied volatility.
Part 3: The Role of Behavioral Bias in Perpetuating Volatility Narratives
Although we have shown that the VIX is functioning as expected, we recognize that some will remain unconvinced. In this final installment of our three-part series, we explore the cognitive biases and mental shortcuts that drive investors to embrace this recurring volatility narrative.
