A number of market analysts believe that the higher hybrid margins offered by issuers in recent months has sparked broad-based selling in the sector as investors look to fund the newer issues. In any event, the increase in margins has caused a divergence with a relationship which has held quite well in the past.
Implied volatility is a statistic which comes from the options market. It is a measure of the relationship between the price of an asset, in the example below bank shares, and options to buy (or sell) those shares at a nominated price in the future. As implied volatility goes up or down, the price of the option goes up or down, all other things being equal.
