Volatility is here to stay

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.