Thursday, October 16, 2008

Welcome to the 80s: VIX at 81.17

...and the Oct 100 calls now at 1.40 - 1.60

10 comments:

  1. Bill, we were just sitting around and watching VIX bounce around. Seeing that you follow this reading pretty closely, could you tell us what the theoretical highest number VIX could hit?

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  2. Hi Diego,

    The VIX is theoretically unbounded to the upside. In 1987 its predecessor (VXO) hit 172. I haven't tried to apply a synthetic VIX to the Great Depression, but I can imagine a reading of 200+ without too much difficulty.

    Cheers,

    -Bill

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  3. I'm starting to believe we will need to see a 1987 style spike in the 150-200 range before we will see true capitulation/market bottom.

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  4. Bill, I remember a good past piece you did on defining VIX with a good comment from someone. The comment gave some illustrations of what actual market moves were consistent with that level of VIX over a given time frame.

    That would be a useful example right now for the 70 - 80 level. If you have something like this already and I missed it, maybe you can provide a new pointer.

    Thanks,

    Jeff

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  5. Hi Jeff,

    I'm drawing a blank on your reference right now, but if I can some up with something that fits the bill, I will post it.

    Are you thinking about something like a Beaufort Scale for market volatility? That could be fun...

    Cheers,

    -Bill

    P.S. Thanks for giving me a nudge in your post earlier

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  6. Bill, I found the item I remembered from your site. It was from March 17, 2008. A comment from "Frank" showed some good examples of what trading is required to reach certain volatility levels.

    We do volatility forecasts, so I could do some simulations, but you are in the spotlight right now :)

    I want to write something that provides more analysis, so I am looking for some of your best explanations, etc.

    Thanks,
    Jeff

    ReplyDelete
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