Rare Shift in 'Fear Gauge' Shows Depth of Market Angst

An uncommon phenomenon resurfaced amid Monday’s sell-off, which has driven the S&P 500 Index down as much as 1.3 percent this morning: The futures contract on the Cboe Volatility Index maturing in August is trading lower than the one maturing in July, in defiance of the common positive spread between front- and second-month contracts. Spot VIX, which measures the implied volatility of the S&P 500 Index over the next month, hit as high as 16.9 Monday, almost four points higher than its average in the past year. Pricing front-month volatility more richly is a sign that traders are acutely concerned about the near-term risks for the S&P 500 Index.