Seven-year itch for the VIX?

No fear market

As trading winds down for the week, U.S. equity indexes are at another record high while bond yields remain stable. In late trading the CBOE Volatility Index (VIX) has fallen below 11.00 for the first time since February 2007. Volatility has apparently decided to move on after seven years, having outgrown its stale partnership with fear that so well framed the financial crisis and the Eurozone debt crisis it spawned.

Naturally, we keep hearing people advise that protection is cheap and worth buying at such low levels. And they may yet be proved right. But as the week comes to a close with another monetary easing from the ECB out of the way and a recovery to pre-recession peaks for U.S. payrolls, demand for protective options is slipping away. The VIX traded as low as 10.92 in the final hour of trading on Friday. 

Chart shows CBOE Volatility index breaks two-year low to trade at lowest since February 2007.


About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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