As we previously mentioned here in the end of June this year, the VIX was close to a historical low point, which was considered abnormal; we believed that a large reason of it being this low was due to Federal Reserve’s monetary support of QE program. As much has been said about the strong correlation of Federal Reserve’s balance sheet and U.S. equity index, we will not touch upon this topic here. The QE program will end this month and the volatility roars back as the program approaches its ending point. We continue to believe that a higher volatility will maintain and S&P 500 may have a major correction over the short term period, if not this time.

Bonus Chart:

Source: Alchemy of Finance, George Soros

Disclosure: The author is long S&P puts at the time of publishing this article.