Stock market volatility hit new levels Tuesday, with the Cboe Volatility Index swinging more than 20 points for a second straight session.

Wall Street’s “fear gauge” closed at 52.24, the highest since April 2020, as the S&P 500 index reversed an early 4.1 per cent gain to end 1.6 per cent lower on growing concern that Trump administration’s tariffs will send the U.S. economy into a recession.

Not only was the VIX — which calculates expected 30-day volatility of the S&P 500 from options contract values — surging, but so was the VVIX Index, known as the “vol of vol.”

The VVIX jumped to close above 170, the highest since the volatility shock of early August, signaling growing demand for VIX options to hedge against wider market volatility.

The demand for options has been supported by wider swings in the underlying S&P 500, which has jumped to the highest since and also by a surge in intraday volatility that can add to option holders profits.

Just looking at the realized volatility may underestimate the scale of intraday turbulence, according to Rocky Fishman, founder of the research firm Asym 500.

“While the VIX looks high relative to realized volatility metrics, part of the reason is that realized vol misses the extent of the intraday volatility seen the last few days,” he wrote in a note.

Bernard Goyder, Bloomberg News

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