Among a flurry of articles stating that the VIX was broken, the old fear gauge finally shows signs of life today. After spending the last week with a 10 handle, levels not seen since pre-financial crisis in early 2007, a double digit decline in the S&P 500 futures yesterday caught some traders by surprise.
The VIX jumped over 10% today to finish at 12.13%. This 1.15 advance is the biggest gain in this index since April 10th, some 51 trading days ago.
The CBOE’s short term 9 day VIX measurement showed an even larger percentage rise yesteday (as it is designed to do) increasing 1.74 points, almost 17%. Again the resultant 12.01 closing level is nothing to get excited about by anyone; however, yesterday’s modest move in the index of losing 10 points in the futures and 12.63 points lower in the index, was only a 64 basis point decline based on the historic high levels we are at in the index.
History has taught traders recently that buying dips has been the ticket for success. I would caution our OptionsHouse family that market trends can change very quickly. The docile bullish market we have been trading can become a much more frightful place very quickly.The above information is provided by OptionsHouse, LLC ("OptionsHouse") for informational and educational purposes only and is not intended as trading or investment advice or a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You are solely responsible for your investment decisions. Commentary and opinions expressed are those of the author/speaker and not necessarily of OptionsHouse. Neither OptionsHouse nor any of its employees, officers, shareholders or affiliated companies guarantee the accuracy of or endorse the views or opinions of guest speakers or commentators. Projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature and are not guarantees of future results. Any examples used that discuss trading profits or losses may not take into account trading commissions or fees.