There is a saying that there is nothing like a good sell to convert a trader into an investor. This is a saying that echoes the sentiment of an even older saying. “Buy it when there’s blood on the streets.”
That adage rings true after stocks tumbled Thursday. CBOE Volatility Index (VIX) It’s the biggest single-day move since Tariff Freedom Week in April 2025, according to data from Bespoke Investment Group.
According to Bespoke’s analysis, on 19 occasions when the VIX rose at least 5 points from below 20 (including a jump of 11 points or more from 16.6 to 28.2 on Thursday), the median S&P 500 return was 4.2% after three months and 4.8% after six months. According to Bespoke’s analysis, returns for each period were positive at 68% and 79%, respectively.
“These kind of sharp spikes from moderate levels are like a line of thunderstorms in the summer,” Bespoke co-founder Paul Hickey said. “The sky quickly darkens and the wind picks up, but the loudest thunder and brightest lightning don’t last long.”
CBOE Volatility Index Year-to-date
Indeed, data shows that storms can have devastating effects in the short term. The median return one month after such an event was 2.1%, while the average return was -0.4%. This is due to the volatility spike in 1990 and some recent major downdrafts since February 24, 2020, when the COVID-19 decline was just beginning.
Before Thursday, there were only 12 other days in stock market history when the S&P 500 index was down 4% and the Nasdaq 100 index was down 6%, including one day during Liberation Week in 2025 and three days during the pandemic in 2020, according to X Account OddStats.
Technology volatility has become even more pronounced. Nasdaq 100 The CBOE Nasdaq Volatility Index VXN rose more than 13 points to 38.3, its highest since April 11, 2025.
Chip manufacturers are selling very hard. VanEck Semiconductor ETF (SMH) Trading below net asset value. But options traders remained bearish in trading through Thursday’s bell, with 670,000 puts traded out of the ETF’s 900,000 total options. Of the $1.7 billion in total option premium exchanged, $1.5 billion was in puts, according to Spot Gamma.
