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Trading Winners and Losers As Volatility Level Hits Low

Traders Magazine, November 2004

Peter Chapman

Record lows in market volatility are driving down both buyside costs and sellside profits. The Chicago Board Options Exchange's closely watched Volatility Index, or VIX, has slid to its lowest level in eight years. The indicator, which represents the implied market volatility of a basket of widely traded options on the S&P 500 index, hit 12.75 in October. It last touched that level in 1996. That's good news for the buyside. "Trading is less pricey when you don't see wild swings," says Marie Konstance, an executive with Plexus Group. Konstance, speaking at a roundtable on block trading, said trading costs have declined steadily.

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