A popular gauge of Wall Street fear threatens to hit rock bottom

Chicago Board Options Exchange’s VIX index touches a level that puts it on target for lowest close in 24 years

Fear is not a factor on Wall Street. That’s the message that a popular benchmark for market jitters is conveying Monday.

The so-called fear gauge, the Chicago Board Option Exchange Index’s VIXVIX, -7.57% closed at its lowest level in 24 years on Monday, finishing at 9.77, down 7.6% on the day.

The VIX briefly touched 9.67, which would be its lowest finishing level since it ended the day at 9.70 on Dec. 27, 1993, according to FactSet data. The record low for the VIX is Dec. 22 ,1993, when it reached 9.31. By comparison, the VIX’s historical average is 20.

Plumbing a fresh nadir for the VIX, which is based on options contracts on the S&P 500 index SPX, +0.00% suggests that the market is taking an increasingly complacent view toward the prospect of a sharp pullback in stocks after what has been a monthslong rally with a dearth of sharp selloffs (see VIX chart below):

Wall Street has been wringing its hands over the level of quiescence the VIX implies because it tends to suggest that investors are ill-prepared for risks that could cause shock to the financial system….

Source: A popular gauge of Wall Street fear threatens to hit rock bottom – MarketWatch


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