Analysis: The VIX curve is rising, and anxiety in the stock market is increasing as the U.S. midterm elections approach

Although Nvidia's upcoming earnings report and Federal Reserve Chairman Waller's speech at the Jackson Hole annual meeting are the main events of interest for investors this week, traders in the stock derivatives market have already begun preparing for potential volatility increases around the November U.S. midterm elections.

Traders focused on volatility in the futures market linked to the VIX index have noted signs indicating that demand for hedging S&P 500 index volatility has increased before and after the elections. VIX futures expiring in September are currently trading at around 17.4, but October contracts have risen to 19, and November contracts have further increased to 19.7.

Matthew Thompson, co-portfolio manager at Little Harbor Advisors, stated, "The U.S. elections are approaching, and you are entering a time window where the elections will impact the VIX. You can already see this 'backwardation' in the term structure of VIX futures."

A study by analysts at the Chicago Board Options Exchange Global Markets shows that since 1945, in 80% of midterm election years, actual volatility has been higher than the previous year, with an average increase of 3.5 volatility points. In years when both the White House and Congress are controlled by the same party, actual volatility increases by an average of 6 volatility points.