The Cboe Volatility Index (VIX), which tracks expected volatility in the S&P 500, surged on Nov. 5 as the U.S. equity sell-off deepened. It briefly rose more than 5.7 points from the previous day to above 28, its highest level since March 31. With the S&P 500 down about 3%, some traders said the VIX had not risen enough to reflect the scale of the decline, using a common rule of thumb to gauge the relationship. The jump pointed to stronger demand for near-term protection and suggested the sell-off caught many traders off guard.
VIX posts its widest intraday range since April
About 90 minutes after the Nov. 5 open, the VIX moved above 28. Its intraday low-to-high swing exceeded 11 points, the widest since April 9. The S&P 500 fell about 3%, putting it close to its steepest one-day decline since April 2025.
Traders often use a rough benchmark to compare index moves with expected volatility: every 16 points on the VIX roughly corresponds to a 1% move in the S&P 500. By that measure, the index's roughly 3% fall led some market participants to argue that the VIX could have climbed further. The rule is only an estimate; the two measures do not move in lockstep every trading day.
At 2:37 p.m., the VIX stood at 25.91, up 9.30 points, or 55.99%. Earlier intraday data showed it had topped 28. The difference between the high and the later reading reflects how sharply volatility shifted during the session.
Traders offer different explanations for the sell-off
Trader Noel Smith said the data he was watching pointed toward reducing risk, but his instinct was that the sell-off could also create an opportunity to buy the dip. Oil prices and interest rates, among other macro factors, had not changed significantly, he said, making macro news a less likely primary trigger. The market action looked more like investors were unwinding positions in a concentrated move. Smith added that what he had heard about hedge fund activity was consistent with that view.
There was no single explanation for the decline among market participants. It may have reflected uncertainty surrounding the U.S. midterm elections, or continued weakness in semiconductor stocks since their June highs. Whatever the cause, options-market activity suggested many traders had not fully priced in Thursday's sharp swings in advance.
Semiconductor sell-off contrasts with VIX move
The VIX fell by more than 4 points at one stage on Wednesday as semiconductor stocks tumbled, complicating the usual interpretation of the volatility gauge. The VanEck Semiconductor ETF (SMH) dropped 3% that day. Data compiled by the social media account “OddStats” showed it was the first recorded trading day on which the ETF fell while the VIX declined by more than 4 points.
VIX options trading picked up sharply on Thursday. By midday, call volume was close to 800,000 contracts, 3.5 times the average for the previous 30 trading days. The surge pointed to greater demand for protection against a rise in the VIX, but options volume alone does not establish what investors expect volatility to do next.