The market is acting like a 12 VIX but VIX is pricing much much higher. That throws your brain for a loop but what it likely means is that stocks will continue to bounce off of 1% selloffs like any normal low vol market. That is great for premium sellers who are harvesting implied option levels that stocks never come close to realizing (ie options overpriced). Something's gotta give. If Trump pulls ahead more that could mean a happier market with VIX perhaps coming under pressure.
But as it is, we've gone from a period mid-year where NO one wanted protection, to one in which people are overhedged. Aug 5 and early Sep were "events" that are partially responsible for keeping risk pricing up. So is that high fear a sign of bad things? Not really. Folks are long, and getting longer (CTA, vol targeting, upside Gamma void, underinvesting, seasonal...) and have to be protected. So they're paying up. Fact.
I get into all that here: https://youtu.be/GfLxTNBDrqY
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