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  • Jonathan Poyer

Uncertainty Rising. Volatility Falling. Markets Depressing. A Look at September.

Updated: Oct 25, 2023



September saw continued turbulence in markets as investors grappled with uncertainties around inflation and Federal Reserve policy. Comments from Chair Powell around an ultimate policy rate still being “some ways” from neutral gave markets pause. At the same time, signs of stubbornly high inflation persisted, with oil prices rebounding into the low $90s from the high $60s in July and rolling strikes among auto workers seeking substantial wage increases to cushion high living costs. What’s more, there continues to be a large spread between the S&P, Nasdaq, and small caps – which are nearly 40% lower for the year than tech stocks.


For September, the S&P 500 returned -4.77% while a 60/40 portfolio returned -3.95% for the month:


For the year, the S&P 500 finished September +13.07% and a 60/40 portfolio +6.45%:


All this uncertainty led to a down month for equities and rise in volatility, with the VIX up about 33%. Is that a VIX / volatility spike? Not really. The VIX rise was only 4.5 points for the VIX, from the 13s to around 17.5. It can be confusing and not very informative to look at percent gains/losses in the VIX, which itself is a reading of the expected annualized volatility percentage. Every 4 points in the VIX roughly represents an increase of 0.25% in daily volatility, so the September move represented market participants not pricing that much more volatility despite the VIX moving up off its lows.


Overall, the market continued in a rising market with falling volatility situation for most of the month. Within this environment, short puts and covered calls were positioned to benefit from volatility remaining somewhat range-bound despite the increase. At the same time, long volatility positions helped provide some downside buffer as the market shifted to a risk-off tone. Going forward as we head into quarter's end with uncertainty prevailing, nimble risk management remains paramount. It is best to be flexible and diversified seeking to generate income while mitigating risk in varying conditions.



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