It’s back! At the beginning of this semester, I introduced our class to the CBOE’s Implied Volatility Index (VIX) in my blog posting entitled “On the relationship between the S&P 500 and the CBOE Volatility Index (VIX)“. In that posting, I pointed out how over relatively short time intervals, percentage changes in VIX and SP500 indices move inversely.
VIX measures market expectations for stock market (S&P500) volatility over the coming 30 days. It is commonly referred to as a “fear index”, and as such, it is indicative of the near-term degree of overall investor risk aversion.
This article mostly focuses on how investor fears of more aggressive Fed rate hikes and a possible recession are causing prices of options to be bid up, as investors “scurry for protection”.
Investors Are Bracing for Surge in Market Volatility
Bets on a rise in Wall Street’s fear gauge swell to most since March 2020