VIX Won’t Go Below 20 Until There’s a Covid Vaccine, Cantor Says

(Bloomberg) -- U.S. equity volatility won’t likely return to normal levels until there’s a vaccine for Covid-19, according to Cantor Fitzgerald LP.

The Cboe Volatility Index has more than halved since its mid-March closing peak of just below 83 to trade around the 33 level Thursday. That’s still almost 15 points above its lifetime average of 19, and it may not retreat much further anytime soon, strategist Eric Johnston said in a June 18 note.

“Given continued uncertainties as the economy reopens, an upcoming election, along with the daily bid for volatility ahead of case data on select U.S. states, we don’t foresee a VIX below 20 until an approved vaccine for Covid is achieved,” he wrote.

Cantor recommends investors buy call options on the VIX -- a bet on an increase in market swings -- when the gauge reaches the mid-20s.

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