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Black swan risk rises to highest level ever

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Investors fear a "black swan" catastrophic event in the financial markets right now more than ever before.

At least according to the CBOE Skew Index, which measures the prices of far out-of-the-money options on the S&P 500. Its goal is to determine the benchmark's tail risk or the "risk of outlier returns two or more standard deviations below the mean," according to the CBOE website.

Put simply, traders are buying options that pay off only if the stock market drops a whole lot.

The measure is up 30 percent since the end of September, including a 10 percent spike for seemingly no reason on Monday.

At its Monday closing level of 148.92, the Skew Index is higher now than levels hit in 2006 before the housing bubble popped and 1998 amid the Long-Term Capital Management implosion. It's above a level hit last year as markets sold off aggressively near the end of the year and...


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