If the reason behind Friday’s sell off is due to events half way around the world, then someone needs to inform volatility traders they are bidding up the wrong market. Also, stock traders are focusing on selling the wrong stocks as well. The headlines say Ukraine is weighing on the markets, but the loser among the S&P 500, Russell 2000, and NASDAQ-100 was the Russell 2000 which lost 1.3% while the other two indexes were down less than 0.10%. I find it interesting that with international issues dominating the headlines that domestic stocks are the ones coming under pressure. Note below that the CBOE Russell 2000 Volatility Index ended the week higher after languishing around for the first half of the week.
Volatility on the NASDAQ-100 has a little bit of an anticipatory nature to it and that may partially explain the drop in VXN that occurred over the week last week while both RVX and VIX were higher. Last week was the busiest earnings week for first quarter 2014 results and with that behind us VXN came down to somewhat normal levels relative to VIX.
Beyond the individual indexes, the term structures did show much in the form of a week over week change either last week. Maybe there is some wait and see going on regarding the US markets or the next surprise move out of Putin.