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marketsJuly 31, 20263 min read

Fear Gauge at 17 — Pros Are Quietly Buying Protection

The VIX hit 17 today — the lowest since mid-April. Last time it was this low, the S&P 500 dropped 8% in two weeks. History doesn't repeat, but it rhymes.

Daniel Berg
Daniel Berg·Editor-in-Chief

Yesterday evening my buddy called me: "Everything's green, everything's running — time to take more risk?" I told him: Wait. I know that feeling. I was exactly there in 2000.

The Calm Before the Storm

The VIX — the market's fear gauge — stands at 17 today. That's the lowest level since mid-April. And that's exactly what makes professionals nervous. Because historically, the same thing always happens: When fear disappears, it comes back with double the force.

Look at the numbers: In April, the VIX was at 16. Two weeks later: 8% crash in the S&P 500. In October 2021: VIX at 15. One month later: 10% correction. The market works like a pendulum — when everyone's relaxed, tension builds in the background.

What This Means for Your Money

If you have 10,000 euros in the DAX or S&P today and fear is this low, it doesn't mean "sell everything". But it means: check your strategy. Do you have an emergency fund? Do you have positions you can hold even with -20% drawdown? Or are you like my buddy, who panics at every 5% drop?

Professionals are doing two things now: They're securing their gains (buying puts, insurance against losses) and they're keeping cash on the sidelines. They're not saying "the market falls tomorrow". They're saying: "If it falls, I'm prepared."

How Pros Are Reacting

What I'm seeing now: Institutional investors are buying protection massively. The put/call ratio — the ratio of bets on falling vs. rising prices — has risen from 0.65 to 0.82 in the last two weeks. That means: The big players aren't betting on a fall. But they're hedging.

In other words: They're not playing against the market. They're playing against complacency. And that's exactly what you should do too.

First Steps for Beginners

If you're just starting: The VIX is your early warning system. If it's below 15, the market is too relaxed. If it's above 25, there's panic. Both extremes are short-term opportunities — but only if you have a plan.

My plan? I hold my boring ETF portfolio. I have my emergency fund. And I know: If the VIX jumps to 25 tomorrow, I don't sell. I breathe, read my old notes from 2020, and remember: Panic is an opportunity. But only for those who are prepared.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.

Sources

BeInOptions Research

Frequently Asked Questions

What does a low VIX mean?

A VIX below 18 shows low fear in the market. Historically, a 5-10% correction often follows because investors become too complacent and ignore risks.

Should I sell when VIX is low?

No. A low VIX isn't a sell signal, it's a warning signal. Professionals hedge their positions in this phase (e.g., with puts) and keep cash ready, but don't sell across the board.

What is the put/call ratio?

The ratio of bets on falling (put) vs. rising (call) prices. A ratio above 0.80 means institutional investors are buying more protection — a sign of cautious positioning.

Key Options Terms

A quick refresher on the terms that keep coming up in options stories like this one.

Implied Volatility (IV)
The volatility the market expects. Rising IV makes options more expensive; falling IV makes them cheaper. IV guide
The Greeks
Delta, Gamma, Theta and Vega measure how an option reacts to price, time and volatility. Greeks explained
Open Interest
The number of open contracts. Heavy open interest at a strike flags an important price level. Read the chain
Premium
The price of an option. Sellers collect it; buyers pay it for the right to trade. Basics
Exercise & Assignment
What happens at expiration when an in-the-money option is actually settled. Learn more
Defined Risk
Strategies such as spreads where the maximum loss is known from the outset. Strategies

Options & the News – Quick Answers

How do stories like this move option prices?

News mostly works through expected movement: when uncertainty rises, so does implied volatility and therefore premium – often regardless of direction.

Do I have to bet on direction to benefit?

No. Defined-risk strategies such as the iron condor or a covered call trade volatility and time value rather than an exact direction.

I am a beginner – where should I start?

Start with our beginners guide and the glossary before putting real capital to work.

Daniel Berg

Editor-in-Chief

Options Educator

20++ Years

Daniel Berg is an ordinary guy from a mid-sized German city. He spent over twenty years in sales at a mid-cap machinery company – finance was never his profession, it was his expensive lesson. In 2000 he put his first savings into Deutsche Telekom's "people's share", buying near €100 and watching it fall to €8. He burned more money on the Neuer Markt afterwards. Only in his mid-thirties did he start the boring, patient way – broad ETFs, patience, no hot tips. At BeInOptions, Daniel passes on exactly that lesson: no miracle returns, just plain-spoken education about options, risk and long-term investing. "I don't sell dreams. I explain the tools – and the mistakes I made myself."

Expertise:Long-Term InvestingOptions EducationRisk AwarenessETF PortfoliosBehavioral Finance
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.