Options Update: VIX indicates potential soft depression

Posted Nov 19th 2008 3:15PM by Paul Foster
Filed under: Microsoft (MSFT), Yahoo! (YHOO), Options

The CBOE Volatility Index (VIX) is recently up 3.62 to 71.26, above its 500-day moving average of 20.77, 200-day moving average of 30.38, 100-day moving average of 38.09, 50-day moving average of 53.53 and 10-day average of 64.18 according to Track Data. This suggests that the market is pricing in an upcoming soft economic depression.

Yahoo Inc. (NASDAQ: YHOO) is recently down $2.10 to $9.45. Microsoft (NASDAQ: MSFT) Chief Executive Steve Ballmer said today that talks with YHOO are "finished." Ballmer remains open to a potential search deal with YHOO. YHOO December option implied volatility of 133 is above its 26-week average of 63 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Tags: depression, inthenews, MSFT, option implied volatility, OptionImpliedVolatility, VIX, YHOO