Many people feel that VIX is suppressed or manipulated. You will see people talking about the mechanics of it and the game theory / who benefits. I think alot of people are missing the point:
VIX is not a straight hedge. Everyone knows this, but consider the implications: many buyers of VIX are greedy — they want a hedge that has the least drag on their long positions. They figure VIX will protect them in the worst of times, without cutting into their profits too much when markets are rising. Can you see why this would be a target for manipulation? Think about a week where SPX is down 4% How would smart money be hedging? They probably were buying puts/selling calls near the weekly high. Manipulators could probably burn those puts if they wanted, but why bother when they can burn VIX buyers? Isn't it easier to suppress VIX, which has a much smaller daily volume than SPY or QQQ ?
As an individual trader/investor, what motivates you to buy VIX? If it's hedging, there are more reliable hedges. If it's speculation, that's fine, but don't complain when the price action 'seems manipulated.'
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