WSJ March 20,2010
A Key Volatility Index That Says 'Buy' May Mean 'Bail'
So the latest numbers are a surefire buy signal, right? Not necessarily. Dig a little deeper and you might even spot a contrarian indicator telling you to sell.
WSJ April 14,2010
Falling Volatility Doesn't Mean a Market Top Is Near
The stock market seems a little too quiet to be near a significant peak.When trends turn, it's usually after a period of increasing volatility, marked by spikes, drops and sharp intraday reversals. Both bulls and bears have a strong enough conviction to battle it out until one side is forced to capitulate. And that's certainly not the case at the moment.
I guess based on one day's market action one of these two writers would claim they were correct
Today the vix closed at 18.7 14.6% up for the day Today's trading range from highto low range was 16.1% remember from my previous post this represents an annualized number.
Using the formula in the march 25 post the 18.7 implied volatility represents a market view that the daily volatility has a 66% likelihood of being above 1.18% . Not at all unreasonable if extrapolating and managing option risk based on today's price action:
The S+P 500 closed down 1.6% today trading in a range of 2.13%
So in my view here is the message of the sharp move up in implied volatility: implied volatility moved up alot
3mos vix and sp 500 charts are here