(Bloomberg News) The benchmark index for U.S. stock options will likely range between 16 and the low 20s this year as the economic recovery boosts equities and stock-price swings narrow, Goldman Sachs Group Inc. said.

The VIX, as the Chicago Board Options Exchange Volatility Index is known, may remain below its two-decade average because the Standard & Poor's 500 Index will climb 18% to 1,500 through the end of the year and U.S. gross domestic product will expand 3.4 percent, equity derivatives strategists Krag "Buzz" Gregory and Maria Grant wrote.

"As growth rebounds and manufacturing data improve, equity typically rallies and equity volatility declines," the New York-based strategists wrote in a report sent to clients. "The combination of stronger growth, moderate inflation and accommodative monetary policy should be a beneficial environment for risky assets and lower realized volatility."

The VIX, which measures the cost of using options as insurance against S&P 500 declines, decreased 3.4% to 17.14 last week, down from last year's peak of 45.79 in May. The volatility gauge fell to a three-year low of 15.45 on Dec. 22 as stock swings narrowed and equity indexes rose to two-year highs, below the average of 20.39 over its two decades of history.

The VIX has retreated since August, when it closed as high as 27.46, because of the stock market rally, the strategists wrote. Those gains have overshadowed other risk measures such as credit-default swaps tied to European sovereign debt and volatility in currencies of developing nations, they said, keeping the VIX below its average. The index closed at a record 80.86 in November 2008 after the collapse of Lehman Brothers Holdings Inc. sent stocks plunging worldwide.

U.S. stocks have advanced six straight weeks, the longest streak since April. The S&P 500 reached 1,276.56 on Jan. 5, its highest close since Sept. 2, 2008. The benchmark gauge for U.S. equities rose 13% last year, bringing the gain for 2009 and 2010 to 39%, the largest advance for consecutive years since 1999, data compiled by Bloomberg show.