Volatility is here to stay

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by Chris Becker

If you’re not familiar with Hyman Minsky’s financial instability hypothesis and his theory of periods of low volatility beget sharp periods of extreme volatility, you’re certainly getting a lesson now in the markets.

The standard gauge of volatility in share markets, since everyone follows the US S&P500 broad index, is the Chicago VIX or volatility index. Sometimes called the fear gauge as it measures the price of protection in S&P500 put options, whose premia jump on heightened fears.

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