The cost of hedging against another equity market blowup has risen to its highest level since October as investors brace for a surge in volatility as U.S. stocks head for their worst week in nearly two months.
The VIX, often referred to as Wall Street’s “fear gauge,” is meant to reflect how volatile traders expect the market to be over the following 30 days based on demand for options contracts, which some investors use to hedge their exposure. Rising prices for options tied to the VIX are a sign that investors are rushing to buy protection for their portfolios, market analysts said.
Charlie McElligott, managing director of cross-asset strategy and global equity derivatives at Nomura, highlighted the move in the VVIX in a note to clients published early Friday.
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