Euro Debt Dumping Pushes VIX to This Scary Level

The Chicago Board Options Exchange (NASDAQ:CBOE) Volatility Index, or VIX (a measure informally known as the “fear index”) (NYSE:VXX) jumped a startling 15% so in this’s morning trading, exceeding a value of over 20 for the first time in two months. The VIX measures the future volatility of markets over a projected 30-day span, and the major spike in today’s VIX levels is thought to be a product of investors’ concerns related to uncertainty in the European debt market.

The VIX (NYSE:VXX) has responded rapidly to recent European Debt Crises, hitting levels of 46 last May (when the Greek debt issue hit the news) and 23 last November (when the Bailouts for Ireland were announced). In contrast to those two spikes, today’s VIX mark is not particularly alarming, though the pace with which it has risen (12% on Friday, and an additional 15% this morning) may begin to stoke fears that generate negative momentum of their own.

Today’s response from the VIX (NYSE:VXX) was likely prompted by fresh concerns regarding Spanish (NYSE:EWP) Sovereign Debt, reports of more trouble with Greek┬ádebt, and a recent statement from Standard and Poor that threatened to reduce its ratings of Italian (NYSE:EWI) debt if the nation did not limit borrowing and do more to stimulate domestic economic growth. European markets are now closed, but were hit hard in today’s trading. Britain’s (NYSE:EWU) stocks finished -1.89%, Germany’s (NYSE:EWG) were down 2%, and France’s (NYSE:EWQ) shed -2.1% by closing time.