Bloomberg News

VIX Rises to Eight-Week High as Stocks Fall to Lowest in a Year

October 03, 2011

Oct. 3 (Bloomberg) -- The benchmark index for U.S. stock options advanced to the highest level since Aug. 8 as U.S. equities dropped on concern officials are failing to contain the Europe’s debt crisis.

The Chicago Board Options Exchange Volatility Index, or VIX, jumped 5.8 percent to 45.45 today. The index measures the cost of using options as insurance against drops in the Standard & Poor’s 500 Index, which slid 2.9 percent to 1,099.23. Volatility gauges rose worldwide as European finance ministers meet to consider how to shield banks from the debt crisis and boost the region’s rescue fund after Greece missed a deficit target for 2012.

“People are nervous about the market, still,” Luke Rahbari, a VIX options trader at Stutland Equities LLC in Chicago, said in a telephone interview. “There’s a lot of fear out there and uncertainty, and that’s why the VIX continues to go up higher and higher.”

The VIX on Aug. 8 closed at a 29-month high of 48, and remains above its 21-year historical average of 20.46. In Europe, the VStoxx Index, which measures the cost of protection against Euro Stoxx 50 Index losses, climbed 4.2 percent to 48.65 today. Hong Kong’s Hang Seng Volatility Index advanced 2.9 percent to 44, while India’s Nifty 50 Index volatility gauge surged 9.8 percent to 35.07, close to Sept. 26’s 35.43, its highest level since August 2009.

--With assistance from Jeff Kearns in New York. Editor: Joanna Ossinger

To contact the reporter on this story: Cecile Vannucci in Amsterdam at cvannucci1@bloomberg.net

To contact the editors responsible for this story: Nick Baker at nbaker7@bloomberg.net; Andrew Rummer at arummer@bloomberg.net


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