Word: markets
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Dates: during 2000-2009
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...gauges the options market's expectations of the 30-day volatility of the S&P 500 index. While the VIX has fallen from a high of over 80 last year to a new low under 23, it is still above its historical average of around 20. Eight years ago, after 9/11, it spiked to just over 40. Recently, stocks have reached new highs for the year, so a move down in the VIX is certainly reasonable. (Read "How to Know When the Economy Is Turning...
Traditionally, the VIX has been described as a "fear index": the higher the index, the greater the pessimism as investors fear market instability. Technically, it is a barometer of implied volatility over the next month, specifically calculated from options prices over the S&P 500's underlying stocks. Bearish put options, the right to sell a stock at a specified price in the future, generally dominate a high...
...market recovery built on a good foundation, or are we looking at a house of cards? One clue lies in the Chicago Board Options Exchange Volatility Index, more commonly known...
Volatility is almost universally misunderstood: that one number can imply any number of market conditions, all of which mean different things to different investors. That's because volatility assumes stocks prices move in a certain way, but this model is limited and unrealistic. Put options are used to hedge against big downward swings in prices, which are a very specific face of high volatility...
Forget volatility. The VIX is a measure of the price of insurance against market instability. After all, put options essentially insure against market declines...