2023 Recap on Four Volatility Indices and a Timeline
Two key events in 2023 that potentially drove higher values for key volatility indices were the collapse of Silicon Valley Bank (SVB) on March 10 and the beginning of the Israel-Hamas war on October 7. The first half of 2023 saw higher interest rates and several banking crises, including the buyout of Credit Suisse by UBS in Switzerland, and two of the three largest bank collapses in US history, by SVB and by First Republic Bank on May 1. As shown in the charts below, all four of these Cboe? volatility indices hit their highest daily closing values of the year in March, after the SVB failure:
·??????? VIX? - Cboe Volatility Index?? (year-end value in 2023 was down 42.5% vs. 2022)
·??????? VVIX(SM) - Cboe VIX of VIX Index (year-end value in 2023 was up 12.9%% vs. 2022)
·??????? VIX1D(SM) - Cboe 1-Day Volatility Index (year-end value in 2023 was down 56.2% vs. 2022)
·??????? VXTLT(SM) - Cboe 20+ Year Treasury Bond ETF Volatility Index (year-end value in 2023 was down 23.1% vs. 2022)
Other events in 2023 include the continuation of the Russia-Ukraine war, four 25-basis-point raises of interest rates by the U.S. Federal Reserve, Finland joined NATO, and Cboe celebrated anniversaries of the launch of Cboe Options Exchange on April 26, 1973, and the launch of S&P 500? (SPX?) options on July 1, 1983.
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