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Re: Irongate post# 54646

Friday, 07/04/2008 7:30:31 PM

Friday, July 04, 2008 7:30:31 PM

Post# of 385199
Ollie, one of the boards had a great discussion on why the VIX isn't spiking. People are buying ETF shorts rather than options because of premium erosions so the VIX is not spiking quite as high. It could be quite possible that the VIX doesn't spike nearly as high during this next drop.

"That's definitely part of what is happening.

Think of the VIX as a product competing in the portfolio hedging market (among others). With the rise of ETFs, ETF options, etc., where there was once only a handful of product choices for the portfolio manager looking to hedge his or her portfolio, now there are many competing products, with the result that the overall market share of the VIX is almost certain to decline -- unless its use grows faster than that of the overall market.
"
Interesting discussion on the VIX on this board:

http://www.investorvillage.com/smbd.asp?mb=6863&mn=2975&pt=msg&mid=5109863
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