Choose Your Own Fear Adventure
One volatility index just woke up, the other's been on high alert for a while.
The Vix pit(ted) against the CSFB.
Photographer: Tim Boyle/BloombergThis article is for subscribers only.
The Chicago Board Options Exchange Volatility Index -- better known as the Vix -- early yesterday yawned, awakened from its long-term slumber and spiked 35 percent to make its biggest jump in two years.
The index, sometimes known as Wall Street's "fear gauge," measures the market's expectations of volatility by looking at the cost of buying a range of short-term options on the S&P 500. Investors can also trade the benchmark using futures and other financial instruments. It's been stubbornly low in recent months (and years) despite investors supposedly fretting over everything from eurozone drama to geopolitical instability to that always-just-over-the-horizon U.S. interest rate rise.