"If you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality." --Bishop Desmond Tutu

Monday, October 06, 2008

The VIX soars as the Dow plummets

The VIX (CBOE:VIX) is a security that trades on the volatility of the market as measured by the S&P 500.
VIX is the ticker symbol for the Chicago Board Options Exchange Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Referred to by some as the fear index, it represents one measure of the market's expectation of volatility over the next 30 day period.
Apparently, this measure of market "fear" is at it's highest point ever. Let me repeat that. It's at it's highest point ever. Higher than in the days following 9/11.
The VIX traded north of 40.0 for much of summer 2002 and reached as high as 43.74 in September 2001. Today's financial crisis if you looked just at the VIX alone is showing a more fearful group of market participants than after the terror attacks in September 2001. The lows we saw in the DJIA in the immediate aftermath of September 2001 was 7.926.93. The lows seen in 2002 (October) went as low as 7,181.47 and the lows after a late 2002 rally into 2003 were back down to 7,397.31.

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