Nifty 50 IndexUpdated INDIAVIX _ It is time to have a contrarian view?
NSE Volatility the VIX’ index 10.86 and a low has reached the level of 8.84 on 15th may 2017,given the market experts that, 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 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 short, from a usage point of view, higher the VIX’ index value, higher is the volatility.
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 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 short, from a usage point of view, higher the VIX’ index value, higher is the volatility.
Note
So it is done finally. The Vix showing a breakout from the trading range. As we anticipated,the correction in market will continue further, since other indicators are also showing bearishness.
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