VIX, the CBOE S&P 500 Volatility Index, also known as the “fear indicator,” posts slight gain at extreme low levels
The VIX Index posted a small gain on Wednesday, up 0.24% to 12.46, well below its historical average of 20 and in oversold territory.
Complacency has been running high as VIX has dropped to levels last seen in 2007 on hopes for higher equity prices and positive earnings.
Options prices are close to ten year lows and equity indexes are closing in on or above all time highs. Many analysts now suggest that the index could descend into single digits if the current rally continues. The record high for VIX is 89.53, set in October, 2008, and the record low is 9.9, reached in January, 2007.
Most observers suggest that low volatility and low prices have been generated by ongoing actions by the Federal Reserve and its loose monetary policy, along with improving economic conditions and mostly positive earnings reports.
The Index generally reverts to mean, meaning that a spike in VIX could be expected, however, the index has also put in long periods at low levels during times of sustained bull markets.
VIX ETF Update:
iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX): -2.7%, The iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) prices itself off of the average and implied volatility of the first two months of futures contracts of the S&P 500 Index.
VelocityShares Daily 2X VIX Short-Term ETN (NYSEARCA:TVIX): -6.57%, This ETN is designed to track 2X return on volatility in the markets as measured by the S&P 500 VIX Short-Term Futures Index.
iPath S&P 500 VIX Mid-Term Futures ETN (NYSEARCA:VXZ): -3.23%, The iPath S&P 500 VIX Mid-Term Futures ETN (NYSEARCA:VXZ) is priced from the average volatility of the 4th through 7th month futures contracts of the S&P 500 Index as traded on the CBOE.
S&P 500 Dynamic VIX ETF (NYSEARCA:XVZ): -1.57%, This ETN is designed to track volatility in the markets as measured by the S&P 500 Dynamic VIX Futures Total Return Index. The S&P 500 Dynamic VIX Futures Total Return Index seeks to combine results of volatility of the S&P 500VIX Short-Term Futures Index Excess Return and the S&P 500 VIX Mid-Term Futures Index Excess Return to create an accurate market volatility reading, as measured by the CBOE. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets.