As iron condor traders (with short vega), we obsess over volatility, both historical and implied. To put the current volatility in the proper context, we frequently measure the current implied volatility relative to the 30 day implied volatility range. This helps us to structure favorable trades that put volatility trends on our side.
During sustained market rallies like the one we are currently experiencing, implied volatility drops significantly. When we ran our usual implied volatility screen against the top 38 indices/ETFs by option volume, the levels (or lack thereof) of implied volatility were quite telling.
Nearly all of the indices/ETFs, regardless of their correlations to the broader market, are experiencing very low implied volatilities (aka cheap options) relative to their 30 day implied volatility range.
The major ETFs such as QQQ, SPY, DIA and USO all have 30 day implied volatility range readings below 1%. These ETFs also have 30 day implied volatility averages that are less than their 30 day historical volatility averages.
While we don't pick market tops or bottom, the mean reverting nature of volatility tells us that vols may not go much lower. And an uptick in volatility, both implied and realized, means better opportunities for iron condor traders.