Greece-Induced U.S. Stock Losses Look Overblown To VIX Traders
By Callie Bost
Don?t fret too much about the reaction in U.S. stocks to Greece, according to traders in products tracking volatility.
Futures contracts tied to levels on the Chicago Board Options Exchange Volatility Index are showing signs that last week?s swoon, which sent a measure of turbulence surging the most since 2013, was overblown. A popular exchange-traded note whose value appreciates with market calm is attracting the most cash in nine months.
American equities? slide, which shook the Standard & Poor?s 500 Index from nine weeks of slumber, came as concern mounted that Greece will exit the euro. Speculators saw the decline as an opportunity to place bets on a lower VIX — essentially a prediction that stocks will weather talks between the country and its lenders.
?People are trying to fade the Greece pop in the VIX,? said Stephen Solaka, managing partner of Belmont Capital Group in Los Angeles, which oversees about $250 million in assets. ?Volatility in the near-term spiked pretty high, but now the market is trading like it?s all blown over.?