padiyaraa

The Fear Index made an extreme low 11 Last week. increasing now.

NSE:INDIAVIX   INDIA VIX
81 4 3
NSE Volatility the VIX             index low has reached the level of 12 and below. Given that market experts no fears of any correction in the coming days. So, traders doesn’t care trading long in the stock market.

Volatility Index is a key measure of market expectations of near term volatility . As we understand, volatility implies the ability to change. Thus when the markets are highly volatile, market tends to move steeply up or down and during this time volatility index tends to rise. Volatility index declines when the markets become less volatile. VIX             is sometimes also referred to as the Fear Index because as the volatility rises, one should become fearful or I would say careful as the markets can move steeply into any direction.

VIX             level of below 15 is seen as stability to the market, while a figure above 15 indicates high volatility .

Volatility refers to the amount of uncertainty or risk about the size of changes in a security or index value. A higher volatility means that a security’s value can potentially vary over a larger range of values. This means that the price of the security can change dramatically.

VIX             indicates the market’s perception of the expected near term volatility . All securities, indices are subjected to volatility and thus the studying them can be helpful because, options prices are chiefly governed by the volatility in the market.

Calculations:
NIFTY             options order book of current month and next month, calls and puts increase in average premiums and discounts are determined to calculate the VIX             Index.. India VIX             is computed using the best bid and ask quotes of the out-of-the-money near and mid-month NIFTY             option contracts, which are traded on the F&O segment of NSE. There are several factors which are used to calculate the index. Some important ones are these Greeks: Time to Expiry, Interest Rates, The Forward Index Level, Bid-Ask Quotes, and Weightage.

Then the variance for the near and mid-month expiry computed separately are interpolated to get a single variance value with a constant maturity of 30 days to expiration. The square root of the computed variance value is multiplied by 100 to arrive at the India VIX             value. In a nutshell or in short, from a usage point of view, higher the VIX             index value, higher the volatility .
Very useful post...
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padiyaraa vanathi
@vanathi, Thanks
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Wow, what a detailed analysis, great Thanks heaps and appreciate very much
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padiyaraa Subra1953
@Subra1953, Thanks
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