The U.S. economy has two potential outcomes: recession or soft landing. Based on interest rates, the market is betting on a recession with a 100 basis point rate cut by year-end. However, the stock market doesn’t fully reflect this fear, with stocks rising regardless of the data, which seems irrational. While this doesn't mean the U.S. is headed for a bear market, significant volatility could occur, as seen yesterday. Even a 5% stock market pullback could drive the VIX index up by over 20%.

The chosen futures contract expires on October 18, covering two critical U.S. data releases—the Non-Farm Payrolls on October 4 and inflation data on October 10, which present the highest risk of a stock market correction.

Best Medium-Short Term Strategy: Bullish on VIX Volatility Futures

Sep 27 2024