This Week in Emerging Market Volatility – 6/6/2014

The emerging market space was strong last week and the iShares MSCI Emerging Markets ETF (EEM – 43.56) rose over 2%. This gain was despite a mid-week hiccup and now EEM is up over 4% on the year. The VXEEM chart below reflects EEM gapping down on Wednesday and then recovering to put up a pretty strong week.


Brazil regained momentum with the iShares MSCI Brazil Capped ETF (EWZ – 47.82) gained almost 3% last week which puts the fund up just over 7% for the year.   This gain came from a big move on Friday that was based on a lack of confidence in the current president of Brazil Dilma Rousseff. That reminds me of stocks rallying when the CEO of a company resigns.


The volatility curves both shifted slightly with the VXEWZ curve showing a little bit of a twist. The index and June futures dropped while there was a slight gain in July, August, and September contracts.  Finally, since all the rage is low volatility I did some quick research on VXEEM and VXEWZ – the all time lows for both (going back to 2011) was set on February 19, 2013 with VXEEM closing at 15.00 and VXEWZ closing at 16.67.


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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…