Professional investors are going all in on the raging bull market, reducing cash allocations to the lowest level in five years and putting the most money in stocks in two years.

As the market looks to continue its best ever start to a year, respondents to the January Bank of America Merrill Lynch Fund Manager Survey are showing that optimism has not dimmed, even after 2017's big 20 percent gain. Stocks were looking at another strong performance Tuesday, judging by early trading action.

Hedge fund managers say their own equity exposure — 49 percent net long — is at the highest since 2006 as the level dedicated to hedging strategies against a possible market downturn falls to its lowest since 2013.

"Investors continue to favor equities," Michael Hartnett, BofAML's chief investment strategist, said in a statement. "By the end of Q1, we expect peak positioning to combine with peak profits and policy to create a spike in volatility."

Hartnett is far from alone in his forecast for a volatility spike. Most Wall Street strategists issued the same call in their 2018 outlooks, and in fact have been anticipating that the market's smooth ride higher over the past year would come to an end any day now.

However, that's not been the case.

The Cboe Volatility Index, a popular measure of investor fear, was last above 20 — its long-term average — in early November 2016. Since then, it's been mostly all oars in the water as even retail investors seem intent on getting into the action.