Chart of the Day - Tuesday, August 6, 2024

🏆 Today’s Chart of the Day was shared by Macro Charts (@MacroCharts).

• While the $VIX exploded on Monday, a lesser-known volatility metric also blew out to an extreme level, signaling excessive fear.

• Macro Charts points out that the 1-month Call-Put Skew reached levels not seen since the pandemic on Monday. This basically means investors were willing to pay a hefty premium for insurance to protect against further downside.

• Investors have only been this desperate for protection a few other times in recent history, including the Covid Crash, Volmageddon, the Yuan Devaluation, and the Flash Crash.

The Takeaway: Investors were extremely desperate for insurance yesterday. Just like car insurance or health insurance, you don’t think you need it until something breaks, and at that point, it’s probably too late; the damage has been done.