FinancialAdvisor's College Class (FACC)

[FinancialAdvisor]

UPDATE 1-Volatility index below 30 for 1st time since Sept
Tue May 19, 2009 10:11am EDT

*Time to start fading into SHORT positions folks, bear market is NOT over yet!

CHICAGO, May 19 (Reuters) - The Chicago Board Options Exchange Volatility Index .VIX, Wall Street's favorite measure of investor concern, pierced the psychological 30 level on Tuesday for the first time in eight months, indicating the perceived need for portfolio insurance is diminishing.

The so-called VIX fell 0.73 percent to 30.02 after notching a session low of 29.95, its lowest level since Sept. 19, 2008. The index sank to 30.24 on Monday, its lowest close since Sept. 12, 2008.

"After a very volatile period in the final months of 2007 and early 2008, the broader economic outlook has stabilized, which has resulted in lower levels of volatility in the equity market," said Frederic Ruffy, options strategist at Web information site WhatsTrading.com.

"The demand for options premiums to protect portfolios is not as high because we are not seeing very large price swings in the market compared to eight months ago," he added.

The VIX, calculated from Standard & Poor's 500 index .SPX option prices, tracks the market's expectation of future volatility over the next 30-day period and often moves inversely to the S&P benchmark. (Reporting by Doris Frankel; editing by Jeffrey Benkoe)


LINK: http://www.reuters.com/article/marketsNews/idINN1941747420090519?rpc=44