A Final Look at VIX in 2014

In 2014 VIX managed to reach the highest levels seen in over two years.  This happened despite a fairly bullish year for the S&P 500 with the index achieving a record high more than fifty times.  also, as seen below most of the VIX action occurred in the 3rd quarter after a fairly quiet summer.


Some of the credit for pushing VIX higher goes to Vladamir Putin who decided to expand Russia a tad to begin 2014. Toward the end of the year the stock market became a bit more volatile. This increased volatility can be attributed to the impact of dramatically lower oil prices, the end of quantitative easing by the Fed, and the awareness that the current bull market run may be a bit overextended.  Despite the spikes above the average close for VIX in 2014 was actually a tad lower than in 2013.

VIX Table - Corrected


The chart below shows the high – low range for VIX over the past 25 years along with the average VIX for the year. The average for VIX in 2014 was a tad lower than 2013, but the range was much more dramatic. On July 3rd VIX closed at the lowest levels since the great financial crisis and this past fall VIX achieved the highest closing levels since 2012.

VIX Range by Year

CBOE experienced strong volume growth in VIX options trading in 2014 with average daily volume of over 630,000 contracts. This is a rise of 11.5% from 2013’s average daily volume of 568,000. I was surprised to see that October was not the busiest month for VIX options this year with average daily volume of 854,000.  The busiest month in 2014 was February as average daily volume was slightly higher than 856,000 contracts.

VIX Option Average Daily Volume

The CBOE Futures Exchange witnessed a record month in October with average daily volume of 323,000 contracts. 2014 was also a record year with average daily volume of just over 200,000 contracts. 2014 was a 26.5% increase over the average daily volume in 2013.

VIX Future Daily Volume - Corrected

Finally, I want to take a look at one of my favorite charts. The picture below shows the average VIX closing prices for 1, 5, and 10 years (specifically 250, 1250, and 2500 days) since 2000. Despite the low levels for VIX over the past couple of years the 10 year average is still just over 20. Also, what really stands out to me is the 1 year average which borders or the all-time low and seems to be turning higher.

VIX Averages The final final chart is below shows last year’s daily closing prices for VIX versus the longer term averages. Despite VIX being ‘broken’ (sarcasm emphasized here) VIX closed above and below all these longer term averages this past year. I think this last chart shows that VIX action hasn’t changed over the last 15 years despite arguments stating otherwise.

VIX vs Averages

For more insight and thoughts about 2014 join me for a 2014 volatility wrap up webcast this coming Monday (1/5/15) at noon Chicago time – register at www.cboe.com/webcasts – if you can’t make it at that time register anyway and you can access a replay a day or two after the webcast is over.