Someone asked me this last week: Here is the answer:
Since its introduction inthe VIX index has quickly become the benchmark for stock market volatility. As volatility often goes hand-in-hand with financial turmoil, the VIX is also known as the "investor fear gauge". As investors expect bigger movements, options tends to become more expensive.
The VIX measures this price.
Hence, the primary use of the VIX volatility index is as an indicator to options traders as to when they should buy or sell options. When the VIX is low, it's a good time to buy options as they are now relatively cheap. After the VIX has established its peak, one should sell options as they have become more expensive.
The VIX bottoms out at around For the VIX to stay above 50 requires large changes over an extended period of time - another near impossibility. Hence, you cannot buy or sell the VIX directly.
Many a times, stock price gap up or down following the quarterly earnings report but often, the direction of the movement can be unpredictable. For instance, a sell off can occur even though the earnings report is good if investors had expected great resultsThe VIX, commonly known as the "fear index" and charting market volatility, has increased dramatically, but the market hasn't moved much.
Investing The VIX Is a 'Giant Casino' That May Magnify Losses. Jul 26, · VIX futures are a series of futures contracts that trade on the CBOE Futures Exchange (CFE) and reflect the market’s estimate for the final days implied volatility derived from a series of S&P (SPX) Index options’ prices.
The Chicago Board Options Exchange (CBOE) created the VIX (CBOE Volatility Index) to measure the day expected volatility of the US stock market Stock Market The stock market refers to public markets that exist for issuing, buying and selling stocks that trade on a .
Mar 16, · CBOE®, Chicago Board Options Exchange®, CBSX®, CBOE Stock Exchange®, CFE®, CBOE direct®, FLEX®, Hybrid®, LEAPS®, CBOE Volatility Index® and VIX® are registered trademarks, and C2(SM), C2 Options Exchange (SM), GVZ(SM), SKEW(SM), SPX(SM), CBOE Futures Exchange (SM) and The Options Institute (SM) are service marks of Chicago Board Options Exchange, .
CBOE Volatility Index (VIX) S&P Index Options | Forex Razor If a currency is more volatile relative forex the U. Currency volatility indices can offer a snapshot of the expected fluctuation in the index of your money, relative to its value elsewhere. Feb 04, · Before I go into why it takes at least three numbers to answer this question, let me remind you that the history of the CBOE Volatility Index (VIX) looks like this: Figuring out the normal VIX level is akin to figuring out how high Alaska, my home state, is above sea level.