VIX Heads to New Record as Stocks Decline Following Rate Cuts (Jeff Kearns)

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Oct. 8 (Bloomberg) -- The benchmark index for U.S. stock options rose to an intraday record of 58.36 as stocks fell after interest-rate cuts by the Federal Reserve and five other central banks failed to reassure investors.

``There's a lot of fear with this credit freeze that no matter what tools governments are trying to apply to the market that it won't be enough,'' said Sveinn Palsson, a derivatives strategist at Credit Suisse Group AG in New York.

The VIX, as the Chicago Board Options Exchange Volatility Index is known, increased 8.4 percent to 58.21 at 11:58 a.m. in New York. The index measures the cost of using options as insurance against declines in the Standard & Poor's 500 Index, which slipped 1.4 percent. Yesterday's close of 53.68 was the highest in the 18-year history of the VIX.

``We're at levels where nothing should surprise you,'' said Tom Sosnoff, president of the Chicago-based online options brokerage Thinkorswim Group Inc. ``In the longer term, the VIX has to trend lower because there's enough liquidity and capital that the market won't support'' levels this high.