Is the VIX the tail that wags the dog?

Nicholas Forsyth

Market Matters

Just after midday in Chicago, around $US100m worth of VIX options were purchased in about 1 second. That is the equivalent to 50% of the average daily turnover. The unusually large purchase was a hedge, or a bet that volatility will rise in coming months in US equities. As most of you know, I am targeting a 10-15% correction from US equities in 2015, hence my initial thought is “a tick up in the volatility index is often preceded by a pullback in US equities”. While I was on the prowl for “lead indicators”, I thought I would also look at the ASX200 against the DOW. I often say, “The Australian market often leads”, but does it? See full report (VIEW LINK)


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