(Bloomberg) — Volatility traders are scrambling to bet on turmoil in the US stock market as it looks like concerns about a new strain of the coronavirus will finally end weeks of quiet trading.
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The Cboe Volatility Index, or VIX, jumped as much as 9 points on Friday morning, the largest intraday move since February, according to data compiled by Bloomberg. It was 7.7 points at 26.3 as of 5:40 am in New York, its highest in more than six months on a closing basis.
Exchange-traded products linked to the index led the ETF’s gains in early trading.
The index, often referred to as Wall Street’s “fear scale,” measures the implied volatility of the S&P 500 over the next month. US stock index futures fell 1.8% on Friday amid the global downturn caused by the new strain of Covid originating in South Africa.
If the move continues, it would be the first drop of more than 1% for the S&P 500 since the beginning of October, and the biggest drop in nearly two months. The gauge has enjoyed a relatively quiet few weeks as traders focus on monetary policy and the pace of growth, rather than the virus.
Read more: Tough week ends with wild swings on new Covid strain
VIX looks set to ripple through the volatility complex. In pre-market trading, the $1 billion ProShares Ultra VIX Short-Term Futures Index (UVXY Index), which is 1.5 times the performance of VIX, is up 19%. The $1.1 billion iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX), an unsupported product, jumped 13%.
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