Crash alarm going off? The VIX panic index breaks through 22. Major investors are buying options to bet on the continuation of the decline.

The VIX index once exceeded 22 points on Friday (16th), setting a new level for the first time in four months. Schematic diagram. (Bloomberg)

[Financial Channel/Comprehensive Report] Artificial intelligence (AI)-related stocks have been sold off, pushing up the VIX index, known as the "fear index", which once exceeded 22 points on Friday (16th), setting a record for the first time in four months. A series of recent option transactions show that the VIX may rise further. In addition, the market will face another key test next week. Many large companies, including Tesla, SpaceX and Meta, will release financial reports, attracting investors' attention.

"CNBC" reported that in a series of attention-grabbing transactions, investors bought multiple VIX call options expiring in November. As long as the VIX remains high during November, these options may make profits.

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Specifically, one trader spent US$1.7 million (approximately NT$54.14 million) to buy 9,200 VIX call options that expired on November 18 and had a strike price of 20 points. Another person spent US$110. US$10,000 (approximately NT$35.03 million) bought 12,500 VIX call options that expired on November 18 and had a strike price of 23 points, betting that the VIX would be higher than 23 points by the close of the third week of November.

Brent Kociuba, founder of data analysis platform SpotGamma Kochuba said: "The speed of the rise of the VIX on Friday (16th), coupled with the high-level trading volume of VIX options, shows that traders are actively taking profits on VIX positions expiring in October and transferring positions to other expiration months to hedge against larger market declines. We noticed that there were several transactions with single premiums exceeding US$1 million (approximately NT$31.85 million) for VIX call options expiring in November."

Of the 10 most popular VIX option contracts traded during Friday's session, nine were calls, six of which had strike prices higher than the levels the VIX fell to after its initial surge. The total premium turnover of these nine contracts was close to US$27 million (approximately NT$859 million), accounting for approximately 36% of the total VIX option premium turnover on the day.

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