This Week in VIX and VXN – 11/8/2013

Despite the small week over week gain in the S&P 500, there was some mid-week drama as the SPX lose 1.3% on Thursday (and then gained it back on Friday).   What was interesting was the lack of response from VIX relative to the drop on Thursday.  VIX managed only to get a bit over 14 on Thursday even with the SPX down over 20 points.  After some time of buying the dips working we are definitely conditioned to not panic when our quote screen is a sea of red.  I guess it is nothing to be worried about, it’s an opportunity!

2013 is on track to go down as a pretty calm year for VIX.  The current 2013 high for VIX is 21.91.  If this level holds as the high for 2013 it will be the lowest annual high since 2005.  I know anything that happened before 2008 is ancient history for the markets, but throughout the 1990’s VIX rarely popped above 20.00 and this may be the new normal for a while.  Of course time will tell.


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Russell Rhoads, CFA

CBOE Options Institute

Russell Rhoads, CFA, is a Senior Instructor with the Options Institute at the Chicago Board Options Exchange. He joined the Institute in 2008 after a career as an investment analyst and trader with a variety of firms including Highland Capital Management, Caldwell & Orkin Investment Counsel, TradeLink Securities and…


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