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  • Ocean Man
    Today was a good example of how the VIX is not a short, not a measure of fear, but a mathematical measure of potential price movement.
    6/29/12
    Reply (15)
    • Ocean Man: Witness oil up 10% and the oil VIX went UP. The huge move made people buy higher calls and lower puts, as it showed that huge moves were
      6/29/12
    • Ocean Man: more likely than previously thought. VIX is usually correlated with moves down and fear because down moves are usually larger than up moves
      6/29/12
    • Ocean Man: (elevator down, escalator up), but oil showed today what can happen with VIX on an unusually large move up.
      6/29/12
    • Bob de'Long: VIX is just the result of a calculation: I don't think it "measures" anything. It's a Rube Goldberg device.
      6/29/12
    • Bob de'Long: If one has to try to use correlates to decide what the VIX measures, then the VIX doesn't measure anything.
      6/29/12
    • 444: What's going on, is everyone mad at the VIX today?
      6/29/12
    • Ocean Man: It measures potential price movement in either direction, but is usually associated with the growing likelihood of a large down move.
      6/29/12
    • Ocean Man: Today provided an interesting exception.
      6/29/12
    • bradyc: yeah, that's not fair. panic selling should be the same as panic covering!
      6/29/12
    • chuckholladay: The VIX should only be associated with there being significant risk that the market will move sharply, whether upward or downward.
      6/29/12
    • Boatyzaffa: good post and discussion. Don;t know if I can add any new info here but here goes. Volatility is generally related to downward movements..
      6/29/12
    • bradyc: It is also called fear factor. Bug fear can mean both ways, fear to miss the rally?
      6/29/12
    • Boatyzaffa: Owning calls is a long vega trade
      6/29/12
    • TruffelPig: Ocean is 100% correct since volatility can be up or down.
      6/29/12
    • realornot: OM: There is absolute fear when you are holding VIX products but not to worry I will provide fears when necessary! Ha ha!
      7/1/12