why is the VIX dropping?

Discussion in 'Options' started by marketsurfer, Jun 27, 2008.

  1. thoughts?

  2. I don't know why... I was wondering that myself. I have noticed this for a while, and it is very interesting. It was up in the low and mid 30s back at the january and march lows. Now, the dow and sp are below where they were back at the previous lows and the vix is much lower. Stock prices have just been creeping down slowly but surely. If anything, I think this suggests we have more room to go on the downside, perhaps leading up to a sort of panic crescendo over the next few weeks/months.
  3. This grabbed my attention after yesterday's close. Looking at VIX at yesterday's close 23.93, it is still way below this year's and last August's lows which is around 36.50-37.57 which means upon more bad news we may break the support of S&P around 1250 area that may lead to levels 1180-1160-1130-1090 respectively.
    Turnaround in oil prices to the downside may stop this downward spiral scenario and help the market to rally of course.
  4. yes, i find it very odd also, fear is very limited! it may take a severe event to shock the market into capitulation. this is one odd market.

  5. Well looking at the way the financials are trading especially regional banks and brokers that day may not be so far away. We may add homebuilders and car makers to that group also..
  6. IMO the drop might be related to the fact that we were in panic mode at the close yesterday with a VIX spike as traders bought protection in order to protect against a crash-like gap down on Friday morning.

    That might explain why the VIX is off slightly while the market is down (but not a 3% gap down).
  7. bh_prop


    Pricing out the weekend time decay and next week is a holiday shortened week.

    VIX almost always goes down on a Friday unless market makes large down move.
  8. Lack of surprise. Everyone knows the economy is shit and will probably get worse.
  9. ammo


    its posible,likely ?,that we rally from here to halfway 1440- 1280,1310ish and then continue lower,that is why the vix is not up,because this is not the big selloff,read all the posts,fear and gloom,that's when we rally,one more time and then down,worst news out there is the banks and they are possibly already priced in for 6 months out,and everyone is thinking when the ol breaks we rally,we will,but the oil back at 100 does not change our economic scenario
  10. The latest drop in the VIX was due to the March '08 Lows holding and the resultant upturn in the markets.

    The more recent drop has not seen such a severe uptrend in the VIX, and actually shows a far more likelier scenario of a late year rally (complaceny holds so long as the market - S&P500 - holds its March Lows, with the expectation that it should rally to its previous Highs from there).

    Here is a chart of the VIX from '06 to present.
    #10     Jun 27, 2008