VIX is rising strongly

The VIX index which is a measure of expected volatility and generally used as a gauge for fear in the market is rising strongly. The VIX is calculated using premiums on a basket of S&P 500 options. Typically the VIX rises when the market falls, today the rise is much stronger relative to the fall in the market. In fact, the VIX started rising even when the market was positive. I think one of the reasons the market has started selling off strongly is due to this action in the VIX as traders are wondering why this is happening and is this a precursor to some bad news(does somebody know something). I don’t know the exact details about the calculation of the VIX but I have observed that it does act strange sometimes near options expiration. At this time I am inclined to believe that this strange action in the VIX is due to options expiration rather than something fundamental.

Advertisements
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s