VIX Surges to Record as Options Traders Bet on Citigroup Losses

[NOBama]

By Elizabeth Stanton

Nov. 20 (Bloomberg) -- The benchmark index for U.S. stock options surged to a record close as concern the recession is deepening and the worst year for the Standard & Poor’s 500 Index drove investors to buy protection from additional declines.

The Chicago Board Options Exchange Volatility Index gained 8.9 percent to 80.86. The measure, known as the VIX, tracks the cost of using options as insurance against losses in the S&P 500, which retreated 6.7 percent to the lowest closing level since April 1997. The S&P 500 has fallen 49 percent in 2008, which would be the steepest annual drop in its 80-year history.

“I don’t think there’s been a recession that’s ever been seen on this kind of global scale,” said Russell Rolnick, senior vice president for Lenox Advisors Inc., which oversees more than $1 billion in New York. “There are such huge swings and fluctuations, if you blink your eyes, the market has totally changed with no rhyme or reason.”

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Interesting article. Worthy of perusing, IMO.

 

[editec]

Investors, even the big ones, don't know whether to shit or go blind.

 

[NOBama]

Investors, even the big ones, don't know whether to shit or go blind.

Hence, the volatility.

 

[editec]

Yup.

I believe that on a day to day basis it can go either way because the market is reacting to the news as it happens.

In the long run?

Well unless or until we do something about some major problems our economy is facing, the market can really only go one way...down.

Of course we can alwasy come up with some stupid policy or the other which could create a bubble or two, but the fundamentals lead me to think that the market is going down because the economy is going down.

We can fix these problems, ya know.