The Korean stock market, represented by the KOSPI index, has been on a wild ride in recent days. After a brief period of stability, the index surged higher overnight, pushing its gains to new heights. However, what’s even more remarkable is the concurrent increase in implied volatility, as measured by the KOSPI VIX. This latest explosion in Korean volatility has been nothing short of epic, with implied vol now basically back at peak mania highs.

To put this into perspective, the KOSPI VIX has surged from a low of 12.5% in early February to over 20% currently. This represents a staggering increase of over 60% in just a few weeks. For context, the VIX peaked at around 30% during the height of the COVID-19 panic in March 2020.

So what’s driving this sudden surge in Korean volatility? There are several factors at play here. Firstly, the ongoing geopolitical tensions between North Korea and the US, as well as South Korea, have been weighing heavily on investor sentiment. Secondly, the recent spike in global oil prices has had a ripple effect on Asian markets, including Korea. Finally, there’s the added uncertainty surrounding the upcoming Korean presidential election, which is set to take place in March.

While the sudden increase in volatility may be unsettling for some investors, it’s worth noting that it can also present opportunities for those who are willing to take on risk. After all, history has shown us time and time again that markets tend to overreact to news events, creating buying opportunities for savvy investors.