The One Signal Before a Crash: VIX Futures Backwardation

Ray Dalio says we are about 80 percent of the way into a bubble, and with the Shiller CAPE near its highest readings outside 1929 and 2000, the valuation case is hard to argue with. But in this Math Check, Mike Butler makes a sharp distinction: a bubble is a valuation call, and timing is a completely different bet. He points out that calling the top too early, like Charles Merrill did in 1928, can cost you most of the final move up. His trigger is the volatility market. As long as VIX futures are in steep contango, with a low VIX, he is not calling a pop. The green light, in his view, is the curve flattening and flipping into backwardation, the way it did into COVID and the tariff scare. Until then he treats the risk as high but not imminent, with the Fed decision and high crude as the catalysts to watch. Education, not a recommendation. 📊 tastylive: https://www.tastylive.com/ 📰 Get Tom's pre-market analysis every morning: https://www.tastylive.com/newsletters 📘 FREE Options Strategy Guide: https://tinyurl.com/bp9ms763 📱 Follow tastylive on X: https://x.com/tastyliveshow Chapters 00:00 Dalio says 80 percent bubble 00:51 Timing is not the same as valuation 01:28 Volatility is not confirming yet 02:00 Contango versus backwardation 02:47 What COVID and the tariff scare showed 03:43 The Fed decision as a catalyst 04:44 Concentration in the mega caps 05:35 Why it is still too early to call it #tastylive #stockmarketbubble #raydalio #shillercape #vix #backwardation #volatility #mikebutler #mathcheck #optionstrading tastylive is a real financial network, producing hours of live programming every day. Follow along as our experts navigate the markets, provide actionable trading insights, and teach you how to trade. With over 120 original segments, and over 25 personalities, we'll help you take your trading to the next level, whether you are new to trading or a seasoned veteran. tastylive content is created, produced, and provided solely by tastylive, Inc. ("tastylive") and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read all applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange Traded Options Risk Disclosure Statement found at https://tastytrade.com/disclosures/. Past performance is not indicative of future results. Performance is not presented net of all commissions, fees, and expenses. Multi-leg option strategies incur higher transaction costs than single leg trades as they involve multiple commission charges. Examples provided are for illustrative, informational, and educational purposes only and are not intended to be reflective of results you can expect to achieve. Supporting documentation for any claims, including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.