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MacroEvent 2018.02.05

The 2018 VIX spike and volatility product rebalancing

Examine how concentrated VIX futures buying amplified a documented volatility shock.

Updated Nov 7, 2026

What evidence can show whether forced orders amplified price moves during a selloff?
Verified facts

Orders converged near the close

On 2018-02-05, US equities fell and the VIX jumped. The BIS found that leveraged long-volatility and inverse-volatility products both needed to buy VIX futures to restore their target daily exposure. Rising futures prices increased the purchases required.

Sources [1]
Interpretation

Read the product rules alongside observed trading

The concentration of futures trading near the close and the products’ rebalancing rules support a flow amplification mechanism. Credit Suisse announced early redemption of the inverse product XIV the day after its intraday indicative value reached the contractual trigger. Together these details give more specific evidence about order direction and size than the price decline alone.

Sources [1][2]
Limitations

The 2026 semiconductor selloff involved a different market structure

This case concerns VIX futures and rule-based products. Determining which funds cut exposure in the 2026 tech selloff, by how much and whether downside volume marked a bottom requires separate trading and positioning data.

Sources [1]

Sources

  1. BIS | Analysis of equity market turbulence and volatility productsAccessed Nov 7, 2026
  2. Credit Suisse | Notice of acceleration for XIVAccessed Nov 7, 2026

Related learning notes

The Investment Committee discusses the stock rebound led by techCompare the video’s position unwind hypothesis with an event where trading rules and the timing of orders supported a specific mechanism.The semiconductor selloff and SOXL’s daily rebalanceCompare the hypothesis of SOXL reducing exposure with a case of concentrated VIX futures buying. The trades point in different directions, but in both cases the daily target and actual executions call for separate evidence.