The elevated speculative position held by funds has raised some concerns about a sharp correction should volatility spike again like it did last week. When volatility spikes funds targeting a certain level of volatility in their portfolio are forced to reduce exposure across the board. This development hit gold last week when the Cboe VIX jumped to 40% (currently 37%).
Spiking volatility aside some concerns has also been raised about the sustainability of a near record long. It reached 285,000 lots in the week to February 25, before the mentioned VIX spike undoubtedly took some length out of the market. However, looking at the length relatively to the size of the cake, i.e. the open interest, we find the position not yet elevated compared with levels reached during the past 12 years.