How to Analyze Sharpies in VIX

Understand how to read this positioning model.

Team Sang Lucci & Wall St. Jesus avatar
Written by Team Sang Lucci & Wall St. Jesus
Updated over a week ago

This chart shows the net number of VIX contracts (longs minus shorts) held by large commercial hedgers.

The green dotted line is one standard deviation above the 3-year average; the red dotted line is one standard deviation below the 3-year average.

Each week, the Commodity Futures Trading Commission (CFTC) releases information on the long and short positions of three groups of traders in a few dozen different futures markets in a report known as the Commitments of Traders.

The three groups are determined by the number of contracts they are currently holding, and are described as follows:

  • Commercial Hedgers (aka sharpies) - Commonly believed to be the “smart money”, these traders are involved in the day-to-day operations of each commodity. They have an excellent handle on the underlying market, and it typically pays to follow their positions when they reach an extreme.

  • Large Speculators - This group mostly consists of large pooled funds, and often take the opposite side of commercial traders. The are primarily trend-followers, and will accumulate positions as a trend progresses. When their positions reach an extreme, watch for a price reversal in the opposite direction of the existing trend.

  • Non-Reportables (aka small speculators or riff raff) - These are smaller traders, composed mostly of hedge funds and individual traders. Again, they are mostly trend-following in nature and we often see price reversals (in the opposite direction) when they hit an extreme.

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