Flat VIX Shows Little Fear

Put-buying is picking up, but not enough to scare people.
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Professional traders who expected a volatile session today are being heartily disappointed.

Jerry Hegarty of

Cape Market Research

is one of them. "There was some anticipation, because of how the futures traded yesterday, that today could be really volatile. But things have been really choppy," he said. "I think the downturn is pretty much over for today."

Hegarty's not the only one. The

Chicago Board Options Exchange

volatility index was down 0.52 to 23.93 at midday, showing a general disregard for hedging broad-market portfolios. The dollar-weighted CBOE put/call ratio, however, was at 0.63. That level shows 63 cents being spent on puts for every $1 spent on calls.

Jay Shartsis of

R.F. Lafferty

said that could be considered mildly bullish, except for his other feelings about the market. "A market that exhibits this kind of divergence can be dangerous," he said.

"We've been waiting to see more call-buying, but maybe we're not going to see it. It's a very confusing market right now," he added. More call-buying would indicate to contrarian strategists that the market might be ready for a downturn. Shartsis said he thinks the lack of call-buying could mean that downturn has already happened.

Unusual call volume was building in

Brite Voice Systems


this morning for no apparent reason.

The company was trading up 9/16 to 8 7/16 at midday. Its April 10 calls, however, traded 200 contracts against open interest of just 30 contracts. That volume took the premium on the option up 1/8 ($12.50) to 3/8 ($37.50) halfway through Thursday's trading.

One trader, however, characterized the Brite Voice volume as retail order flow and not "smart money."

Typically, out-of-the-money action such as what's showing up in Brite Voice today indicates the belief that the underlying stock price is poised for a quick upturn.


Melissa computer virus hit some CBOE systems, but not enough to do any significant damage.

"It's fairly limited. It came into just one department here and was contained because we took preventive measures over the weekend," a spokeswoman said. "We had our computer-systems people send a warning, so when we opened our computers on Monday morning, we knew what to look for."

She declined to say which department first received the virus, saying the board wanted to prevent copycat viruses from being resent. She added that CBOE members "weren't affected at all." The exchange is directing users to free sites to obtain antiviral software.