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I think we can all agree that the 1st quarter of 2015 has had its fire works.  We have seen the OIV (the oil VIX explode higher).  We have seen the VIX itself average well above the average of the last two years (both 14.2%).  However, I think the index that may be the most telling of the next quarter is EVZ, the EuroCurrency Volatility Index.   VIX and OIV while elevated and high respectively have at least found a range.  EVZ appears to be in the entering a stage similar to OIV in October

chart_-_evz_-_cboe_eurocurrency_volatility_index_window_screenshot.png

Livevol (r) www.livevol.com

14% is incredibly high for currency volatility,  its like having the VIX at 30 or 35%.  However,  recall VIX went to 48 in 2011 and into the 80's in 2008,  there is room for this thing to explode.  And if the EVZ is exploding that means the overall market is also going to continue this whippiness up and down (which might end up taking us no where again).  Either way,  I think we have ALOT of movement coming up in currency as it relates to the Euro,  and I think euro vol might have just started.

The Lesson:

More and more other things affect equities at the index level beyond earnings,  or,  things besides productivity and efficient affect earnings, which effect stock prices. 

The Trade:

As high as vol is in FXE and CME Eur/USD options they look like they are setting up to go higher.  I think I might like buying dips in Vol.

 

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