Auric,
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biz.yahoo.com
Monday December 28, 5:31 pm Eastern Time
U.S. OPTIONS/VIX firms despite quiet stock trade
CHICAGO, December 28 (Reuters) - The Market Volatility Index , a gauge of stock investors' fear, edged up Monday despite narrow-range trade in the underlying index as stock prices consolidated near all-time highs in quiet holiday trade.
Still, the VIX remains near its lowest level since late July.
"I'm kind of surprised that volatility is up. It could be due strictly to the market being thin," said an S&P 100 index options trader.
The VIX, which measures the implied volatility on several strikes of OEX options, finished the session up 0.77 at 22.81.
The OEX ended 0.90 lower at 608.01, after earlier hitting another all-time high of 611.64.
"It's really quiet. It's a typical week between Christmas and New Year's. The Internet stocks are the only thing holding the market up."
The VIX last week dropped to a five-month low below 20, a level considered indicative of the excess complacency that can lead to a sudden downturn in the market.
Jay Shartsis, director of options trading at R.F. Lafferty & Co., said the dollar-weighted put-call ratio for individual equity options traded on the Chicago Board Options Exchange today hit a sell-signal level. Just 33 puts traded for every 100 calls, down from 41 last week.
The calm VIX and scant put buying show the public is comfortable with the latest gains in the stock market, which is benefiting this week from seasonal strength.
"It very rarely falls apart in the last week of the year. The worst thing that can happen is that it goes flat. But I would say
trouble's coming in January," he said.
Trading in America Online Inc.(NYSE:AOL - news) was especially active today on both the put and call side following last week's announcement that the online giant will be added to the S&P 500 index effective January 1.
AOL shares ended 20-9/16 higher at 157-1/4.
Huge volume in January 40 calls on Oracle Corp. (Nasdaq:ORCL - news), at over 13,000 contracts, was almost all generated by a single customer who sold the options, said a market maker on the CBOE floor.
"It might have been someone rolling out of a position," the market maker said.
KJC |
