July 16, 2008 at 12:00 pm by Tom Lydon
Oil and related exchange traded funds (ETFs) have been volatile lately, so it stands to reason that there’s now an index that allows investors to track just that: the price volatility.
The Chicago Board Options Exchange (CBOE) unveiled the Crude Oil Volatility Index (VIX) yesterday, just in time for the commodity’s largest one-day price drop in 17 years.
The index is tied to options of the United States Oil Fund (USO), which holds oil futures. If the index surges, it generally signals an increase in prices, says Tennille Tracy for the Wall Street Journal. However, not always: Tuesday’s dramatic drop in oil prices sent the index higher by 7.7%. VIX tends to move inversely to the stock market.
USO is up 55% year-to-date.
