Low VIX Masks Insurance Markup Options Traders Are Paying
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Here’s another sign that beneath the surface of placid stock markets, investors aren’t exactly sound asleep.
It’s the persistently high premium traders are paying for equity options, visible in the difference between implied and realized volatility in the S&P 500 Index. The gap, definable as the intangible cost of stock insurance over and above what is accounted for by the market’s swings, has now lingered for 51 trading days.