Short Sellers Net £98.76B on the Wall Street Market Crash as VIX Surges Above 60

US markets are in free fall, with the S&P 500 dropping by over 10.72% in the past five days. The Dow Jones Industrial Average is down by 4,090 points, or 9.8%, to 37,645, while the Nasdaq Composite fell by 1,939 points, or 11.27%, to 15,267 in the same period.

President Donald Trump's trade war against China escalated when he announced 104% tariffs on the Mainland in response to its reciprocal tariffs. Economists and analysts believe the global trade war has significantly deteriorated the 2025 economic outlook and raised inflation and recession risks.

China's Premier Li Qiang reportedly said China has policies to 'fully offset' the surcharge imposed by Trump.

Short Sellers Capitalise on the Market Downfall

According to Ortex Technologies data, traders betting that US stock would decline have pocketed £98.76 billion ($127 billion) between the 2nd and 7th of April amid Trump's tariff announcements and the sharp stock selloff. Short sellers profit by selling borrowed shares and repurchasing them later at a lower price.

The data revealed that short sellers betting on the fall of US companies with a £777.64 million ($1 billion) or greater market cap have already gained £146.97 billion ($189 billion year-to-date through 7th April.

The US stock market has lost trillions of dollars in value, wiping out 401(k) and IRA investments held by millions of Americans as experts urge them to remain calm and ride out the market upheaval. Short interest for benchmark indexes globally surged from 31st March before peaking on 4th April.

'It seems fair to say that some short sellers seem to be looking to lock in their gains,' said Ortex Technologies co-founder Peter Hillerberg.

Volatility Index Reaches Alarming Levels

The CBOE Volatility Index, or the 'fear gauge,' surged this week to over 60 on 7th April before falling momentarily and rebounding to 52.76, signalling panic among investors and extreme uncertainty in the stock market.

The VIX index is derived from real-time mid-quote prices of the S&P 500 index's call-and-put options and is among the most popular volatility measures.

Only two periods in the past two decades, during the 2008 global financial crisis and the 2020 COVID-19 pandemic, have seen the VIX end the day above 50. The gauge hit a record intraday high of 89.53 in October 2008 but has averaged just above 19 in the past 10 years.

'It's quite clear that the market is in a panic,' said Van Luu, global head of FX and fixed income strategy at Russell Investments.

The VIX is above 40 because of 'US government policies that have created a crisis in investor confidence similar to wars and major disruptions to the global economy,' said Nicholas Colas, co-founder of DataTrek Research. 'Only a change in those policies will force volatility lower and stabilise stock prices.'

However, Trump continues to defend his tariff play. 'Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION, and the long time abused USA is bringing in Billions of Dollars a week from the abusing countries on Tariffs that are already in place,' he said in a Monday post on Truth Social.

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