Correct answer, of course, is no one knows, because the future is opaque and unpredictable. And indeed you have some very smart professionals going to cash or directly betting on a 5-10% correction in the S&P500. And a set of equally smart fund managers calling for a 2600 target by mid-2018.
What we can say with some certainty, based on options activity, is that if a single day 3-4% drop in the S&P500 occurs it can trigger a massive unwind in short volatility positions:
And with several political risk factors on the near term horizon, including the possibility of a government shutdown in late September due to the failure of Congress to extend the debt ceiling (yes, they are arguing over who is going to pay to fund the border wall with Mexico). It certainly should surprise no one if a coming tomorrow could be very different than the extraordinarily low-volatility landscape we face today.
What we can say with some certainty, based on options activity, is that if a single day 3-4% drop in the S&P500 occurs it can trigger a massive unwind in short volatility positions:
https://www.reuters.com/article/us-usa-stocks-volatility-idU...
And with several political risk factors on the near term horizon, including the possibility of a government shutdown in late September due to the failure of Congress to extend the debt ceiling (yes, they are arguing over who is going to pay to fund the border wall with Mexico). It certainly should surprise no one if a coming tomorrow could be very different than the extraordinarily low-volatility landscape we face today.
The Case For Long Volatility by Eric Peters
https://www.linkedin.com/pulse/case-long-volatility-eric-pet...