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VIX (Volatility Index) Ends the Week with a Huge 3 Day Run.
Posted: 01/23/10
By: tomgrisafi
Barack Obama's speech this week on the proposal to "curb" banks risk-taking, sent over an interesting message to investors.
The reaction was heavily noticed at the Chicago Board of Options Exchange, where the Volatility Index ended the week up 22.6%, trading at 27.31. The VIX is an index designed to track market volatility. The main goal of the VIX is to estimate the implied volatility of the S&P 500, over a 30 day period. The most common nickname for the VIX is "Wall Streets fear Gauge".
The big sell-off in the S&P this week is leaving many options traders who bet on a surge in volatility very happy.
Statistics show the VIX moves in the opposite direction of the S&P nearly 80% of the time. Traders who buy options that gain in value when the VIX rises are usually betting equities will retreat because of this.
2 Comments
Guest
Posted: 01/25/10
The Volatility Index was great!
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Guest
Posted: 01/25/10
President Obama really poked the beehive this week.