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Is the VIX Expiration on Wednesday a Cause for Shorting Volatility?
The VIX expires at 9 a.m. on Wednesday, which coincided with the low in the market's volatility index. Traders started to short volatility by selling VIX futures that can make its way into S&P options. That feedback loop led to this rally as traders sold very short-dated volatility and it pushed up the price of stocks. The Fed announcement then kind of pulled the rug out from under the stock market when people tried to sell off their longs.