Calm Amidst the Equity Rally

Daily Stat | March 13, 2013 | Topics: Economic Outlook,  Equities 

20.48: Average of the VIX over the past 20 years

We have been seeing a rally for US stocks, but how does volatility compare? The Chicago Board Options Exchange's Volatility Index, or VIX, is said to gauge the fear in the markets. It is calculated from the prices investors are willing to pay for protective options tied to the Standard & Poor's 500-stock index.

The VIX has averaged 20.48 over the past 20 years. From the beginning of the financial crisis until late last year, the index had an approximate floor around 15, and any dips below it were usually brief. However, since the start of 2013 the VIX has finished below that 15 level in 40 out of 47 trading sessions. Those lower levels show a relative level of calm among investors. But caution may still be warranted.

Source: The Wall Street Journal, "'Fear Gauge' Makes Case for New Name," 3/8/2013

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