In a note Thursday, analysts at Goldman Sachs told investors to "buy VIX calls" to hedge a potential rise in volatility.
The firm explained that its volatility model, which is based on five economic factors, suggests the CBOE Volatility Index will average 21.5 in April based on its economists' forecast compared to 13.8 now.
"We believe 1) VIX at a historically low level, 2) SPX close to its all-time highs, 3) high demand for upside asymmetry, 4) our model estimated upside to VIX and 5) upcoming macro/micro catalysts offer a compelling case for investors to own VIX calls," wrote analysts at Goldman Sachs.
They added: "Over the past 30+ years, VIX has averaged 19 in April, and we see upside risks to the current low VIX levels given current macro environment and upcoming macro/micro catalysts."
With the S&P 500 index skew close to multi-year lows, the investment bank argues that the upside asymmetry is crowded, and they believe VIX calls would be an attractive hedge in case of a pullback in equities.
"We believe the upcoming analyst days, earnings season and macro events, led by the FOMC meeting (3/20) and election-related catalysts could drive volatility higher from here," concluded the bank.