Drop in Nasdaq Volatility Index Is Latest Sign of Options Froth
- On a day the Nasdaq plunged 4.8%, the VXN index also eased
- It’s the latest in a series of unusual moves among the two
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On a day when technology shares shook as hard as they have in six months, a measure of volatility on the same set of stocks did a strange thing: it went down.
With the Nasdaq 100 swooning 4.8% to cap a three-day, 11% correction, a gauge of index turbulence that is partly a reflection of options prices also dropped -- another in a series of unified moves that has now lingered for two weeks. Normally, the two gauges move in the opposite direction, as declining stocks buttress expectations of a rougher road ahead.