VIX

Jobs report. Unemployment. Big morning sell-off. Why isn't VIX taking off to da moon? What with it being a fear gauge and all.

Not shared yrt

Jobs report. Unemployment. Big morning sell-off. Why isn't VIX taking off to da moon? What with it being a fear gauge and all.

Its a Friday, premiums are heavier with 3 days coming out of the model. And there was some expectation that there could be a big move today, not big enough. I know people are also wondering why overall stk mkt volume has not picked up after the holidays. Its not going to much. Trillions of $$$ have been lost, and levels of brokers, traders, offices, and volumes will all be less going forward.

Jobs report. Unemployment. Big morning sell-off. Why isn't VIX taking off to da moon? What with it being a fear gauge and all.

I posted this in OGM thread.

Think about it this way: why does market go up 100% with VIX in tight trading range of 5-10? Isn't it because perceived market risk can be more accurately assessed(hence hedged), as no one will pay much premium on calls and puts that are far away from the near strike price!

If market was anticipating an up move of 50-60% within next few months, VIX would spike just as high as during the recent swift downward direction. We have no prior experience of looking at VIX behavior in secular bear markets; but, theory would also support 5-10 trading range and market losing 50% over next several years.

Edited by linrom1, 09 January 2009 - 02:50 PM.

useful info in this thread at least for me appreciated!