So this is what a Federal Reserve-led back-stopping of risky assets will do: eliminate the “freak-out” premium in the market. The Chicago Board Options Exchange Volatility Index, commonly known as the VIX, recently closed below its 200-day moving average for the first time since May 2007.
Whether that condition persists is another story. The VIX, a gauge of investor unease, has been steadily rising since early 2007 after a period of historically low volatility. That indicator’s closing peak in 2008 was on March 17 at 32.24, and has since steadily declined in the wake of the Bear Stearns Cos. acquisition, helped along by the Fed.
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