U.S. Markets close in 3 hrs 32 mins

VIX up sharply as stocks drop again

Chris McKhann (chris.mckhann@optionmonster.com)

The CBOE Volatility Index rose sharply yesterday as equities retreated again.

The S&P 500 fell 13.61 points to 1612.52. The index was in positive territory for the first 90 minutes but slipped from there, closing just above the day's lows. It finished just above support, with the next levels at 1598 and 1580, while resistance is at 1660.

The Nasdaq 100 lost 33.71 points to end the day at 2926.13. It bounced off support in midday trading but then fell through that level in the afternoon. It has some support at 2910 and then at 2860, while resistance is at 3000.

The Russell 2000 dropped 9.14 points to 972.31. It too held just above support, with the next level down at 947, while resistance is at 1000.  

The VIX was up 1.52 points, or 8.9 percent, to close at 18.59--just off its session high. That is also the highest close for the volatility index since Feb. 25, the day that the SPX closed just below 1488. That was an outsized move for the VIX, given the action in the SPX.

The June VIX futures gained 1.30 points to 18.20, while the July contracts were up 0.95 points to 18.55. That puts them both at a discount to the spot VIX reading, which is usually not a good near-term sign for equities. The action had the iPath S&P 500 VIX Short-Term Futures Note (:VXX), which comprises those two futures, up 5.9 percent to 21.2.

More than 685,000 VIX options traded, putting it second on the total volume list, led by 426,000 calls. The buying pushed the VVIX Index, which measures the implied volatility of those options, up 10 percent to 101.77. The VXX options also saw heavy trading as 598,000 contracts changed hands, with calls slightly outpacing puts.

More From optionMONSTER