Pair Trading Oil With The VIX Would Have Made Bank This Month

Traders who have betted on upside in oil and downside in volatility in S&P 500 index would have profited from their strategy this month.

According to Morgan Stanley, crude oil rose 53 percent over the past 24 trading days, while the VIX slipped 45 percent over past five weeks, the largest 5-week decline in history.

The VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index. It measures the implied 30-day volatility of S&P 500 index options, and is widely considered as the best gauge of fear in the market.

Currently, crude oil is up 1.6 percent at $42.33. The VIX closed Thursday's trading down 3.67 percent at $14.44, its lowest one-day settlement since December 24.

A Bloomberg report said the VIX is on track for its longest streak of weekly declines in four years.

The Fed's tempered outlook for rate increases knocked down traders' expectations as reflected in futures prices, according to data compiled by Bloomberg. Odds for a June boost to borrowing costs are at 39 percent, compared with about 54 percent before the Fed's statement Wednesday. Probabilities had risen in the past month amid better U.S. data, higher crude prices and a rebound in equities, the report said.

Meanwhile, trading in U.S. equities may see some volatility on Friday due to quadruple witching, a quarterly event when futures and options contracts on indexes and individual stocks expire.