Ahh Canada - 2 out of 3 ain't bad Message Board

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Strategies & Market Trends : Ahh Canada - 2 out of 3 ain't bad

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To: Shack who wrote (1245)	3/17/2001 6:36:29 PM
From: Dexter Lives On	of 5144

Shaw/Shack, VIX relates to the S&P 100. The price of the options spike (or flatten) based on market players' short term buying and selling trends in short options (they use a basket of 8 near at-the-money 30 day S&P100 options to measure VIX). So if you're writing options and you notice urgency in players' trading patterns, you raise your "implied volatility" in calculating prices you will sell options for. Thus unstable markets bring about high implied volatility which kicks up options prices. It's an accurate measure of calm vs. panic in the marketplace; the same concepts apply to VXN but it relates to the Nas 100. So options' implied volatilities can be a "very short-term" leading indicator on stock price movement and make a good measuring stick for bearish/bullish sentiment. Both VIX and VXN are discussed at cboe.com Rob As Shack points out, the techs are close to some kind of bottom; sadly not so for the rest of the market.

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