October 31, 2011
Good morning. It was a huge week for the market last week, with the SPY up 4.63 (3.7%) to close at 128.60. That strong up move was accompanied, as it often is, but an even larger downturn in the option premium levels as defined by the VIX. Those levels, the so-called fear index, were down a whopping 22% on the week to close at 24.53, the lowest close since August 4 of this year. Quite obviously the combination of headline news items associated with the sharp rally were the announced framework of a resolution to the Greek debt issue and some slight increase in the tone of domestic economic reports.