The Market Is Now Panicking Not To Panic

The market is exhibiting extreme complacency as investors dump downside protection and skew collapses to historic lows despite a speculative AI-led rally. This 'melt-up' psychology has made tail-risk hedging and VIX call spreads unusually cheap relative to historical norms.

Key Takeaways

• 1.The market has entered a state of full complacency where investors are aggressively dumping downside protection to chase AI exposure.
• 2.Downside skew and the SDEX index have collapsed to multi-year lows, indicating a regime where insurance is unusually cheap.
• 3.A 'melt-up' psychology is prevalent where spot prices and semiconductor implied volatility are rising, but broader market volatility (VIX) remains depressed.

Table of Contents

• Complacency
• The fear fade
• Smoked
• This is your market
• Extreme
• Protection
• VIX call spreads
• VIX seasonality

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