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Now Watch As Volatility Implodes at Trader’s Narrative




Now Watch As Volatility Implodes


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When you have a comedy show like The Colbert Report mention an esoteric indicator like the CBOE volatility index… you know that things have run their course:

colbert VIX volatility fear index sentiment

The picture is from Monday’s show in which Stephen Colbert riffed off the “fear index” and mentioned that it “is at an all time high” He then said, “Even worse? The fear index is scared of heights!”. :D

As I mentioned before, I was in Spain a few years ago and in that trip was introduced through friends to a mutual fund manager. To protect the guilty no names will be mentioned. Over a few drinks talk inevitably turned to the markets and I commented on the VIX index. From the puzzled looks it seemed she didn’t know what it was so asked and once she confirmed that she had never heard of it, I explained it to her and told her where to get more info.

My world was a bit shaken though - how can you manage money without even knowing what the heck the VIX is? Sheesh.

The VIX hasn’t become a household term but, we’ve already seen similar financial spreads and indicators, normally reserved for economists, traders and quant-jocks being bandied about liberally in the news: LIBOR, TED spread, CDS, CDO, etc.

Today continued the divergence between the VIX & the S&P 500 Index (SPX). Volatility barely budging even though the market fell 3%.

You can watch the segment here:

If you are outside the US, tough luck! With the exception of Canadians who can go here.

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4 Responses to “Now Watch As Volatility Implodes”  

  1. 1 Quarrel

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    Hey,

    Just so you know - the comedy central videos seem to work wherever I go in the world. They certainly are working just fine right now in Australia.

    –Q

  2. 2 Rocko Chen

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    I’m here in New Zealand and have spoken to a number of “financial advisers” and “fund managers” for a couple of WELL KNOWN investment pools here, they were also entirely clueless of implied volatility. Nothing but a bunch of crappy car sales people.

  3. 3 Declan Fallon

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    www.dailyshow.com has a link to Colbert and you can watch both shows outside of the US.

    :)
    DJF

  4. 4 Nurseb911

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    While not on the same parallel as the VIX, I often explain to friends seeking advice about who they should use for a financial advisor that if the advisor (bank or otherwise) has no idea what the Rule of 72 is (relating to compound interest) that they should just walk out the door :)

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