http://www.nytimes.com/2008/10/20/business/20vix.html?_r=1&ref=business&oref=slogin mere fact that the mainstream keeps bringing it up makes me more and more bullish
VIX gets plenty of press, that’s nothing new. Heck, the press came up with the “fear index” name, most likely.
We’re back down near 55… whew this market feels so much better today.
use these clowns @ the biggie newspapers as contrarian indicators. NYC writes about VIX at all time high, next day it deflates hard.
Question: If the stock market skyrocketted, wouldn’t the underlying relationships of options that drive the VIX index push it higher too? Like if we were seeing the market move up several percentage points on average instead of down like the last few weeks, would the VIX also go up? I ask because there just looks like a major negative correlation between stock market returns and the index levels. So when the mkt goes up, VIX goes down, when the mkt goes down, VIX goes up. But we wouldn’t necessarily expect that to be the case right?
Dwight Wrote: ------------------------------------------------------- > Question: If the stock market skyrocketted, > wouldn’t the underlying relationships of options > that drive the VIX index push it higher too? Like > if we were seeing the market move up several > percentage points on average instead of down like > the last few weeks, would the VIX also go up? I > ask because there just looks like a major negative > correlation between stock market returns and the > index levels. So when the mkt goes up, VIX goes > down, when the mkt goes down, VIX goes up. But we > wouldn’t necessarily expect that to be the case > right? I think the VIX is heavily weighted to put buying, there is less put buying when the index goes up, hence the inverse relation.
The VIX measures implied volatility, not historic volatility. The VIX is not weighted towards puts or calls, although arbitrage keeps the volatility between puts and calls close. More puts tend to transact than calls; that’s why most days put/call ratios are over 1.
Just look at the volatility/activity on this board in a down vs up market. Down market = 10 pages per day of threads Up market = hardly 2 pages per day of threads Same goes with the amount of time spent talking about the stock market in newscast. In a down market, they spend much more time.