Volatility Views 664: A Terrible Year for Negative Correlation

In this episode, Mark Longo is joined by Dr VIX Russell Rhoads and Andrew Giovinazzi (The Rock Lobster) to conduct a "post-mortem" on 2025 and break down the surprising trends defining the start of 2026. The team dives deep into the VIX/SPX correlation breakdown, exploring why the traditional inverse relationship failed many traders last year. Russell brings the hard data, revealing how 2025 nearly set a record for the highest inverse correlation—making diversification more difficult than ever. Topics covered in this episode: Volatility Review: A look at the "yo-yo" week in the S&P and the recent firmness in VIX Cash. The Correlation Myth: Why "buying the dip" worked but "shorting vol" was a losing battle in 2025. VIX Term Structure: Analysis of the Jan/Feb futures and the 100% premium to realized volatility. VIX Options Flow: Breaking down the massive activity in Jan 17 calls and the persistent "magic" of the 15 puts. The Crystal Ball: The team places their bets for next week's VIX close and debuts their 2026 year-end predictions.