VIX isn’t – Even as markets swing and anxiety stays high, the VIX has remained relatively subdued in the high teens. Jim Carroll argues the index isn’t malfunctioning—it’s being shaped by shifts in options trading, market maker positioning, and the growing scale of income
The market can feel like it’s twitching—sharp moves, nervous pricing, stories of volatility everywhere—yet the VIX keeps sitting in the high teens. For investors who watch that number like a dashboard, the disconnect is unsettling. It’s the kind of calm that makes you double-check your own eyes.
Jim Carroll. the “Vixologist” and a Senior Wealth Advisor and Portfolio Manager at Ballast Rock Private Wealth. framed it this way in a conversation at Basis Northwest with ETF.com President & Director of Research Dave Nadig: the VIX isn’t broken. It’s just being outplayed by how volatility is being traded.
Carroll pointed to a major shift in options flows. Traders, he said, have moved dramatically toward short-dated contracts—down to zero-day-to-expiration (0DTE) bets. Instead of buying broad 30-day protection. hedgers can aim much more surgically at specific events. such as a Fed announcement or a CPI print. That kind of hedging, Carroll argued, doesn’t show up in the VIX the way the old pattern did. So the index can look calm even when the underlying anxiety in the market is very much alive.
Then there’s the way dealers are positioned. Carroll described a dampening effect from market maker positioning: right now, dealers are largely sitting in long-gamma positions. In practice. that mechanically pushes them to sell into rallies and buy into dips—absorbing volatility before it can fully develop. It’s a market that can look coiled, but won’t necessarily release.
Carroll said this compression is measurable in Bollinger Bands, Keltner Channels, and average true ranges—each historically tight. He also warned that this quiet can last longer than investors expect. Still, the quiet periods don’t usually arrive with no warning. There are often “breadcrumbs” beforehand for anyone paying attention.
A third layer has made the volatility picture harder to read. Carroll tied it to the growth of income-focused ETFs, including covered call strategies, buffered products, and defined-outcome funds. These products sell options at enormous scale. and every one of those trades lands on the other side with a market maker managing the exposure it creates. Carroll didn’t pretend it’s easy to stitch all of those flows into one clean story. But the takeaway is straightforward: reading volatility now means understanding the whole ecosystem, not just checking the VIX each morning.
The most sobering part of Carroll’s argument came when he turned to a question every investor eventually faces—who’s really there to provide liquidity when things go wrong. He said major high-frequency market makers—citing Citadel and Susquehanna among them—provide liquidity as long as it remains economically rational for them to do so. The moment it isn’t, he warned, they’re gone, without announcement and without warning.
In other words, the long-gamma cushion, the dampening effect, the structural resilience—Carroll said—can evaporate exactly when investors need it most.
His advice followed the logic of that warning: watch price action, follow the breadcrumbs, and don’t mistake calm for permanence.
VIX volatility 0DTE options hedging market maker positioning long-gamma Bollinger Bands Keltner Channels average true range covered call ETFs buffered products defined-outcome funds Citadel Susquehanna ETF.com Basis Northwest