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Market fear rises after Fed non-move

Green light for stocks?

So much for a relief rally.

Stocks spiked in the hour after the Federal Reserve announced its intention to keep the key federal funds rate at rock-bottom levels for another month at least. But markets soon beat a speedy retreat, and opened Friday significantly lower.

Perhaps even more telling is the action in the CBOE Volatility Index, which measures the prices of options on the and hence the magnitude of expected moves in stocks. It is often known as the market's "fear gauge," because it will rise as investors pay more to hedge their market exposure.

This index, the VIX, opened Friday 7 percent higher than where it opened Thursday.

Read More Global markets unconvinced by Fed inaction

Since the VIX is itself highly volatile, that's not actually as large a move as it may sound. But the fact that the index is up should be kind of striking.

After all, this Fed announcement was widely considered to be the most anxiety-provoking event markets have had to contend with in months. And Thursday, the central bank chose to not only keep rates ultralow, but also to release a statement that didn't point to an imminent hike ahead. That might have been expected to calm investors.

Instead, the price of protection is rising a bit as the market drops, reflecting the typical inverse relationship between the two. And the VIX is back above its long-term average level of 20, after briefly dipping below it Thursday.

Read More The biggest winners off of the Fed decision

In other words, equity investors are not reassured, and the recent spate of market fear has not dissipated. Traders continue to seek protection, with nearly two puts trading for each call on Friday morning.

It has frequently been quipped that for investors, an accommodative Fed policy is like owning a "put" under the market, meaning that it protects them against losses at some market level. The thinking is that the Fed will only allow stocks to fall so far.

But on Friday, traders are instead buying puts of their own.