Trading in options on Wall Street’s fear gauge froze after Monday’s open, CBOE says

Traders observe delivers in the S&P alternatives pit at the Cboe Global Markets trade shortly soon after the Federal Reserve introduced it was elevating fascination rates on September 26, 2018 in Chicago, Illinois.

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Trading in options on Wall Street’s concern gauge was impossible in the first minutes of Monday’s session due to an absence of rates from the sector makers on whom trading relies upon, a representative of index operator CBOE Worldwide Marketplaces said.

CBOE Senior Trade Desk Expert Ryan Stone told Reuters that VIX solutions ended up tradable at 9:51 a.m. ET (1351 GMT) but a absence of liquidity led to a lag of about 7 minutes right until the first trade, all-around 9:58 a.m. ET.

When exercise in alternatives resumed, the VIX surged to its maximum level since December 2008. The volatility spike happened as global inventory markets were melting down on fears about the spreading coronavirus and crashing oil prices.

It adopted 15-moment trading halts throughout U.S. exchanges, brought on by an opening 7% decline in the S&P 500 that established off circuit breakers.

The S&P was very last 7.6% down and the VIX was up 12.5 points at 54.46.

A spokesperson for CBOE afterwards confirmed that the index series was available for buying and selling at 9:51 a.m. ET but that the to start with trades experienced not took place right up until afterwards.

“At 8:51 am CT, the readily available constituent sequence went into opening rotation, had been obtainable for trading, and by 8:54 am CT, an up to date price of the VIX Index was subsequently published,” she stated. “At no time for the duration of this period of time did the VIX Index encounter a specialized problem.”

According to CBOE’s web-site, the VIX Index is calculated working with typical S&P 500 solutions and weekly S&P 500 solutions that are shown for trading on CBOE Choices.

“What brought about the delay in opening SPX & VIX – with these getting solutions – is we had to manually open them,” Stone mentioned.

“We gave market place makers the hold off to make sure they were being obtaining suitable current market info so they could effectively quotation these.”

In line with its own regulations, CBOE had earlier taken a “precautionary evaluate” to not open up the VIX to buying and selling right before the bell as it was not capable to calculate the index worth at the time, immediately after E-mini futures on the S&P 500 hit their 5% decrease limit in premarket trade.

The VIX index is extensively utilized by traders as a measure of anticipated volatility of the S&P 500 around the subsequent 30 times and is traders’ major way of shielding versus or betting on sharp moves in stocks.

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