Tom McKay

Options markets flashed another bearish signal last week when the price of the VIX, the benchmark volatility index traded at a premium to its own futures, a sign demand is increasing for protection against stock losses. The Index has jumped 17 percent since Dec. 9 to 15.76 and twice closed above its one- and two-month futures in the past three days, data compiled by Bloomberg show. The index that tracks Standard & Poor's 500 Index contract prices rose 14 percent last week as American shares lost 1.6 percent. This will be one to watch as There are two relationships which have held well over the past thirty years or so 1) When volatility increases, stocks do not go up, and 2) When US stocks go down, Australian stocks do not go up. (VIEW LINK)


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