Home

Super Volatility

Tuesday, 22 January 2008

Volatility most frequently refers to the standard deviation of the change in value of a financial instrument with a specific time horizon. It is often used to quantify the risk of the instrument over that time period. Volatility is typically expressed in annualized terms, and it may either be an absolute number ($5) or a fraction of the initial value (5%). Volatility can be traded directly in today's markets through options and variance swaps.

Having seen what is going on in financial markets and its crazy ups and downs, it is important to have a look at CBOE VIX volatility index. As clearly shown from the chart, VIX Index moved to a 52 week high at 37.57 with a percent change of 14.09%. This massive increase in volatily was generated by Fed rate cut (the biggets single reduction since 1990) and by a great sense of uncertainty. It seems that panic sellers and some funds have decided to reverse their short positions but they are ready to click on sell button again. We expect high volatility to last until ECB decision with VIX trading above 30% level until the end of the month.

-click to enlarge-

Tags See All Tags

Free social bookmarking plugins and extensions for Joomla! websites!

Login Form

Main Menu

Trading in Foreign Exchange, CFDs, Options, Futures and Commodities carries a high degree of risk to your capital and it is possible to lose more than your initial investment. You should only speculate with money that you can afford to lose. These products may not be suitable for all investors, therefore please ensure that you fully understand the risks involved and seek independent advice if necessary. Please read our full Disclaimer.