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Options traders aren?t buying the stock market?s message.
While the Standard & Poor?s 500 Index (VIX) posted its first gain of the week on Dec. 11, rising 0.5 percent, the Chicago Board Options Exchange Volatility Index also jumped, climbing 8.4 percent to cap its biggest four-day advance since 2011. The two gauges, one measuring share prices and the other anxiety among traders, only move in unison about 20 percent of the time.
Investors watching oil plunge day after day are growing concerned the decline will destabilize financial markets and that?s boosting demand for hedges, according to Bob Doll, the chief equity strategist at Nuveen Asset Management. Gains in the VIX picked up after House Minority Leader Nancy Pelosi said Republicans lack the votes to pass a $1.1 trillion U.S. spending bill and urged fellow Democrats to force removal of some banking and campaign-finance provisions.
?I?d put oil front and center,? Doll said by phone. ?We?ve had a move from $100 to $60, and if that had happened over a year or two that?s one thing, but this has been so much so fast that it creates higher uncertainty, which creates higher volatility, and that?s the reason you?re seeing people buy protection.?
The S&P 500 and VIX haven?t posted a bigger lockstep advance since at least 2000, according to data compiled by Bloomberg. They?ve both gained on the same day on only 22 other times this year, the data show.
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