Free Republic

Amid the gloom, one trade looms so unusually pessimistic that it is hard to process because the world would likely need to end, or come close to it, for it to prove profitable. The trade is predicated on the Cboe Volatility Index, or VIX, hitting 150 by March, a level that has never before been realized. In recent sessions, an investor bought 50,000 VIX March $150 call options, paying about 19 cents per contract. The trade is so large, and so unusual, that it was almost certainly made by a wealthy investor worried about a massive stock market decline, perhaps...

Trading in options on Wall Street’s fear gauge was impossible in the first minutes of Monday’s session due to a complete absence of prices from the market makers on whom trading depends, a representative of index operator CBOE Global Markets Inc (CBOE.Z) said. CBOE Senior Trade Desk Specialist Ryan Stone told Reuters that VIX options were tradable at 9:51 am ET (1351 GMT) but a lack of liquidity led to a lag of about seven minutes until the first trade, around 9:58 am ET. The VIX surged after trading resumed to its highest level since December 2008 after trading in...

One of the most popular measures of volatility is being manipulated, charges one individual who submitted a letter anonymously to the Securities and Exchange Commission and the Commodity Futures Trading Commission. The letter makes the claim to regulators that fake quotes for the S&P 500 index SPX, +0.26% are skewing levels of the Cboe Volatility Index VIX, -2.50% which reflects bearish and bullish options bets 30-days in the future on the S&P 500 to gauge implied stock-market volatility (see excerpt from the letter below). The flaw allows trading firms with sophisticated algorithms to move the VIX up or down by...

To some market analysts and fund managers 2018 is beginning to look like the early days of the financial crisis of 2007-2009. They say it’s not the selloff itself that seems ominously familiar but the underlying causes of the selling. “Part of what brought down the stock market [this week] was very symptomatic and very similar to what happened in the financial crisis,” said Aaron Kohli, interest rates strategist at BMO Capital Markets in New York. “Secured products, leverage and complexity combining to form a selloff. When you look at 2008 a lot of it was there.” Much like in...

An exchange-traded security which is supposed to be a bet on calm markets was collapsing after hours. The VelocityShares Daily Inverse VIX Short-Term exchange-traded note (XIV) is down more than 80 percent in extended trading Monday. The security, issued by Credit Suisse, is supposed to give the opposite return of the Cboe Volatility index (VIX), the market's widely followed turbulence gauge. The VIX doubled during regular market hours Monday, causing obvious havoc for a product seeking to track its inverse return. Though, the XIV dropped just 14 percent during regular trading. But then after hours trading began and the security,...

As I write this, the VIX is down 87%. Termination event occurs at 80%. At 80%, the fund, essentially, goes away. There are two VIX instruments with this sort of clause. One fund is $500B. Are we going to wake up and find out a volatility fund, and all the investor cash, disappeared in a single day?

He compares the VIX contango trade to the portfolio insurance problem that was blamed for the 1987 crash... they don't realize the rate of change of the VIX can be so extraordinary that the losses can mount up massively and super quickly...

HSBC's technical-analysis team has thrown up the ultimate warning signal. In a note to clients released Wednesday, Murray Gunn, the head of technical analysis for HSBC, said he had become on "RED ALERT" for an imminent sell-off in stocks given the price action over the past few weeks. Gunn uses a type of technical analysis called the Elliott Wave Principle, which tracks alternating patterns in the stock market to discern investors' behavior and possible next moves. In late September, Gunn said the stock market's moves looked eerily similar to those just before the 1987 stock market crash. Citi's Tom Fitzpatrick...

U.S. stocks were seeing a broad-based rout Thursday, led by a selloff in media, technology, consumer and financial stocks as investors wrestled with worries about a slowdown in global growth. “There is heightened uncertainty that began with yuan devaluation last week, while overall China’s growth is slowing father than thought. This is weighing on confidence,” said Randy Frederick, managing director of trading & derivatives at Schwab Center for Financial Research. The nervousness on Wall Street was apparent from a jump in the CBOE Volatility index VIX, +16.98% which has gained more than 35% to 17.65 over the past three trading...

The fiscal drama in Washington DC is over … until January 15th when they have to do it again. In fact, there is no “Rocky” celebration. USuscdseur credit default swaps (CDS) barley fell. The US Treasury 10 year yield dropped 5 basis points as of 10:18am EST. ust10101713 The VIX? Barely a small wave in the ocean. vix101713 Bloomberg Confidence Index? Lowest since 2011, the last time Congress has their budget duel. BBExpectations The only noticeable change was in gold which rose 3% this morning. gold101713 Remember, we still have a slow growing economy and a dreadful piece of tax...

President Obama spoke tonight and flip-flopped on Syria. We are going to launch, but we might later. In other words, markets should remain nervous, but better than a few days ago. Actually, President Obama still wants to launch what Kerry called a “really small” strike, but wants Congress to postpone a vote. I predict that we will not get final resolution on Syria until after October 1st, the kick-off date for Obamacare. The VIX dropped today signifying less volatility in the SP500. vix091013 And the 10 year zero coupon volatility continues to drop. Like a Tomahawk Cruise Missile. 10yrvolzero With...

The economy has been having trouble reaching the magical 80% level for capacity utilization. Capacity utilization fell to 77.6% in July. It has never reached 80% under President Obama while achieving 80% under President Bush. Obama’s economic model of 1) MORE regulation (EPA, Dodd-Frank, Obamacare), 2) MORE taxes and 3) ignoring crises in entitlements (see $70 trillion in off-balance sheet entitlements) is a blueprint for SLOW economic growth and part-time jobs. caputil081513 Still, Treasury yields continued their doleful rise after May 1st on Fed tapering fears. ust10081513 Gold has risen today. gold081513 As did silver. silver08152013 And the VIX jumped...

Check Out Today's Incredible Spike In FEAR Joe WeisenthalFebruary 25, 2013If you wanted to digest it all in one chart, it might be this one: A chart of the VIX -- aka "The Fear Index" -- which measures how much people are trying to buy protection against a big downside drop using options. It went ballistic today. This is raw fear, as people buy protection against a big drop.Via Stockcharts.com

The VIX Index and VIX ETFs finally hit the VIX Fiscal Cliff bottom, but will the bounce last? Hard to say, as the iPath S&P 500 VIX Short Term Futures ETN (NYSEARCA:VXX) only rose .22%, while the VelocityShares Inverse VIX ETN (NYSEARCA:XIV) only lost .20%. The VIX Index rose 1.24% to close at 13.81, still very well below the average ’20′ level of fear. Perhaps investors are finally starting to feel fear regarding this year’s first earnings season, however after a positive Alcoa (NYSE:AA) earnings report released last night, fear surrounding earnings reports is unlikely, even if the widely anticipated...

Some Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within The Next 60 Days Sam RoFebruary 6,2013 CNBC Stocks have been rallying relentlessly to post-crisis highs. Meanwhile, the volatility index (aka the VIX, aka the "fear index") is near historic lows. But according to UBS's Art Cashin, some options trader has made an enormous $11.25 million bet that the VIX will explode higher very soon. And a rally in the VIX is usually accompanied by a drop in the stock markets. From this morning's Cashin's Comments (emphasis ours): A Very Big Bet In A...

The Stock Market's Long Decline Has Begun October 20, 2010Charles Hugh Smith The Fed's campaign to boost the risk-trade in equities by destroying the dollar has reached its limits. Now gravity will take hold as stocks enter a Long Decline. On Monday, Daily Finance published my article Is the Market Ready to Roll Over? These Signs Say Yes. On Tuesday, October 19, the market did roll over. Is this merely a brief hiccup on the way to S&P500 1,500 and Dow 15,000, or the first stages in a Long Decline? Here is the evidence to support the idea that stocks...

Why The Market Is Making You Sick Clemens Kownatzki Jun. 9, 2010, 10:39 AM Most average investors have a hard time grasping some of the more abstract concepts such as Market Volatility. But everyone knows when the market crashes it hurts the portfolio and ultimately your own wallet. During the financial crisis of 2008/09 the VIX Index, also known as the fear index, was one of the new trendy financial terms you could hear at cocktail parties. Instead of the talk about the Lakers or the Dodgers, I remember hearing “How about that VIX” at more than a handful of...

Yes, Something Is Definitely Stirring In This Market Joe Weisenthal May. 4, 2010, 4:33 PM It's tempting to assume that the current market kerfuffle will end like every other one we've seen over the last year, but right now it feels like something is rumbling. Here's the VIX really picking up. Image: StockCharts.com Here's a little more from Bespoke: The S&P 500 is currently trading down sharply on the day at -2% or so. If the index closes down more than 1% today, it will have been up more than 1%, down more than 1%, up more than 1%, and...

Wall Street fear gauge jumps to July levels By Laura Mandaro, MarketWatch SAN FRANCISCO (MarketWatch) -- An options index known as Wall Street's fear gauge surged Friday to a nearly four-month high, as a fresh round of worries about the sustainability of recent months' rally surfaced. The CBOE's Volatility Index (INDEX:VIX) gained 24% to 30.69 by the exchange's close, its highest closing level since July 8. For the index, which uses options contracts based on the S&P 500 Index (INDEX:SPX) to measure market expectations of near-term volatility, it was the biggest percentage gain since late 2008, near the peak of...

5 Signs Irrational Exuberance Is Back http://www.fool.com/investing/general/2009/10/14/5-signs-irrational-exuberance-is-back.aspx Alex Dumortier, CFA October 14, 2009 At a time when many pundits or "investors" are grasping at straws to justify the market's run, I'm seeing an increasing number of buds of "irrational exuberance" (in the words of the maestro bubble-blower Alan Greenspan). It's as if the crisis was a sharp but fleeting pain that investors wish to relegate to the status of a bad memory. To give a jolt to our market nervous system, here are my top five signs that exuberance is returning to the market at an alarming rate: 1. Stocks...