Zed Francis Talks Fed Volatility, Hidden VIX Signals & AI Chip Options Trends

• The upcoming FOMC meeting is seen as a significant event with some risk priced in, driven by expectations of a new Fed chair's approach to rates, quantitative easing, and communication.
• Oil prices have dropped to three-month lows, but nominal growth expectations and inflation (ex-energy) are higher, leading to elevated longer-end interest rates despite less aggressive rate cut expectations.
• Implied volatility (VIX) has fallen below realized volatility, suggesting it's an opportune time for investors to consider long volatility strategies as a hedge.
• In the semiconductor sector, put open interest has significantly outpaced call activity, indicating investors are hedging their rally gains and monetizing profits, which is seen as a sign of a more sustainable upward trend.

The discussion centers on market expectations for the upcoming Fed announcement, noting a slight risk priced in due to potential shifts under a new Fed chair. While oil prices have dropped, growth expectations remain high. Volatility is cheap, offering hedging opportunities, and strong put activity in semiconductors suggests investors are hedging gains rather than chasing the rally, indicating a potentially sustainable market move.