This Week in Emerging Market Volatility

After a strong week two weeks ago the iShares MSCO Emerging Markets Index ETF (EEM – 40.47) was down 0.7% on the week, but the trading activity was very quiet and narrow. Implied volatility as indicated by EEM option prices was down as well with VXEEM down 9.25% which was similar to the drop in VIX this past week. Risk as priced by equity market related option contracts continues to drop. 

The iShares MSCI Brazil Index was also quiet for the week dropping less than 0.01%. As with all other index related volatility VXEWZ was down dramatically on the week moving from 27.00 to 25.03 for a loss of around 7%. Although 25.03 appears to be a pretty high implied volatility reading for an index, remember implied volatility is different for each market. This closing level for VXEWZ that has not been seen in over a year for VXEWZ so where 25 would be high for VIX, it is pretty low for VXEWZ.