An interesting way to look at trends in the S&P 500® (SPXTM) Index is to look at the dates on which it first closed above its 100-point milestones. As shown in the table below, the SPX first closed above 200 in Nov. 1985, above 500 in March 1995, above 1000 in Feb. 1998, and above 1200 in Dec. 1998. The SPX Index subsequently topped 1300, 1400 and 1500 in the next fifteen months, and many investors at the turn of the century assumed that 100-point rises in the S&P 500 would be easy to achieve in the near future. However, investors struggled with two bear markets over the past 13 years, as the SPX fell to a low point as it closed at a disappointing 676.53 on March 9, 2009 (see the line chart below). Investors had to wait from March 22, 2000 until this past Friday for the SPX to top another 100-point milestone as it closed at 1614.42 on May 3, 2013.
PORTFOLIO MANAGEMENT TOOLS
As shown in the table above, the SPX Index has experienced substantial gyrations (both up and down) over the past 15 years. How have investors responded to these fluctuations? Over the past decade many investors have looked beyond “traditional” investment techniques such as stock picking, and explored the possibility of using tools such as options on the S&P 500 to manage risk and add income. Note in the charts below that average daily volume for SPX options rose from 145, 852 in 2003 to 805,821 in Jan.-April 2013, and the VIX options average daily volume rose to 614,406 in the first four months of 2013.
Please visit www.cboe.com/benchmarks to explore these benchmark indexes that use SPX options that have had lower volatility than the S&P 500 Index –
- CBOE S&P 500 BuyWrite Index (BXM) www.cboe.com/BXM
- CBOE S&P 500 95-110 Collar Index (CLL) www.cboe.com/CLL
- CBOE S&P 500 PutWrite Index (PUT) www.cboe.com/PUT
- CBOE Low Volatility Index (LOVOL) www.cboe.com/LOVOL
More information on options strategies is at http://www.cboe.com/Strategies