VIX Analysis, Price and Chart
- VIX surges nearly 40% on Wednesday as speculative mania soars.
- Retail traders upsetting the status quo.
The VIX fear gauge shot into life yesterday and jumped by around 40% on the day before nudging lower in early European trade today. The Chicago Board Options Exchange Volatility Index – VIX – is a ‘calculation designed to produce a measure of constant, 30-day expected volatility of the US stock market, derived from real-time, mid-quote prices of S&P 500[1] Index call and put options’. A rising VIX warns of heightened volatility ahead, and yesterday’s move sent the gauge to its highest level in three months.
A Guide to S&P 500 VIX Index[2]
A cluster of previously unloved US equities are now the new media darlings as a wave of concerted retail buyers forces these companies to extreme highs, damaging the balance sheets of a range of hedge funds and traditional Wall Street[3] firms. These companies, including GameStock (GME), AMC Entertainment (AMC) and Blackberry (BB), and others, were all amongst the most-shorted companies in the market as Wall Street traders expected their stock prices to fall further. However, a huge surge in retail buying, heavily discussed on the reddit WallStreetBets forum, has sent these companies’ share prices ‘to the moon’ causing the short sellers to cover at a huge cost. With the buyers still looking to buy stock to cover their short positions – real-time data on short positions are readily available - and with some options on these companies expiring on Friday, the expectations are for these companies to see another surge in volatility today and tomorrow. With GameStock currently seen over $100 higher than last night’s record close in pre-market trading, volatility looks set to jump. In cases like
