Investors predict the market will drop, but not yet

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FORTUNE — Is the market too calm?

Despite some recent bumps, shares have mostly raced up this year, and investors seem to be getting less and less worried about risking their money in stocks. The VIX (VIX), which is sometimes called the fear index because it tracks how many people are buying insurance against a market drop, fell 5% on Tuesday alone to 18.10. That capped a big recent drop for the index, which is down nearly 30% in the past six months, not to mention last summer when the VIX was up in the mid-40s, or during the financial crisis when it hit an all-time high of nearly 90.

But the spot price for the VIX, which is what is most often quoted, is just one way to measure the index, and not even the one that is actively traded. The market for the VIX has grown considerably since the financial crisis, and traders now buy and sell futures contracts based on where they think the index will be in one month to six months out. (There are seven and eight month contracts, but they don’t get much action.) Back in November, the market was predicting that volatility would drop during the next six months. It did. This year, though, that relationship has reversed. In mid-March, even as the spot price was falling, the difference between where the VIX was and how much higher investors thought it would be in six months hit an all-time high. The gap has narrowed recently, but it’s still three times as large as it has been on average since the financial crisis, with the VIX futures market predicting market volatility, which usually rises when the market falls, will jump 33% later this year.

“Investors are saying over the course of the next year there’s a pretty good chance something bad will happen,” says Paul Justice, a researcher at Morningstar.

The problem with that logic is that if investors think there is going to be a dip in the market in the next six months, why wouldn’t they just sell now. It’s normal in commodities markets for futures prices to be higher than spot prices. Everyone knows that corn will typically be more expensive in the winter when there is less of it available. Future prices reflect that. The same things goes for oil prices in the summer, when gas is in higher demand. Traders even have a name for that upward bias in futures markets – contango. But contango, or even super contango, which is what some people are calling the current state of the VIX, shouldn’t happen with stocks. The future is supposed to be priced into the market, at least our best guess of it. And with the market headed for a double-digit gain this year, investors seem far from pricing in trouble ahead.

So what’s going on? Some say the VIX market could be sending a false negative. There are more than 30 exchange traded notes (like ETFs but not for stocks) that track the VIX. More than a dozen of those funds have launched in the past year. Many of these funds only focus on longer dated futures contracts. Some market watchers say that these new funds are driving more money into the VIX market, and sending prices up.

Another explanation is that the VIX market is just weird. “Theoretically, you shouldn’t get contango, but with VIX futures what we are talking about is a derivative of a derivative,” says Lee Munson, founder of asset management firm Portfolio, and author of the book Rigged Money. “You are bound to get imbalances.” And Munson says those imbalances shouldn’t necessarily be ignored, even if we don’t truly understand why they would occur. Indeed, there seems to be a number of reasons investors would be worried about the future – the recent job market stumble, Europe, and the possibility of more quantitative easing from the fed, to name a few. Why they aren’t worried about that stuff right now is a valid question, but it doesn’t mean that there isn’t reason to worry.