This is one of those quiet setups that looks boring right before it bites. Vol is getting crushed even though stocks are barely moving, which tells you complacency is doing the heavy lifting. When UVXY and UVIX bleed this hard without a real rally, it usually means traders are leaning the same way. That works until SPY stops cooperating, and then the snap back is fast and ugly.
AI has the answer:
SPY's modest +0.4% month-to-date gain alongside UVXY's -22% and UVIX's -29% declines signals an extreme VIX crush, driven by contango decay in these leveraged volatility ETPs. This disconnect arises because UVXY and UVIX track short-term VIX futures with 1.5x…— Simon Says (@Seniorstrategen) December 20, 2025
the last 3 times when $VVIX at this low level, the sell off came right away or 1-3 days after. $VVIX is the $vix of vix$spy $spx $iwm $qqq https://t.co/fpgwUkmR5b pic.twitter.com/Pmf90KgKDw
— SwingTrader (@SwingTraderQ) December 20, 2025