Thread: India Volatility Index (India VIX) ๐งต
(1) The India Volatility Index (India VIX) measures the expected level of market fluctuation for the Nifty50 Index over the next 30 days. It was introduced by the NSE in 2008, following the concept created by the Chicago Board in 1993.
(2) The India VIX value of 15 means traders anticipate a volatility of 15% in the next 30 days for the Nifty, which means the expected value range is between a +15% and -15% increase or decrease.
(3) Historically, when India VIX decreases, Nifty rises and when India VIX increases, Nifty falls. There is a negative relationship between the two.
(4) The VIX, a measure of market volatility, typically ranges from 15 to 35. A low VIX (below 15) indicates a stable market, while a high VIX (above 25) suggests increased market volatility.
(5) VIX provides insight into market sentiment, indicating whether investors are feeling confident or cautious about the near-term market trends. It reflects the level of market volatility and provides a more accurate depiction of market instability.
(6) Nooresh Merani's research on US $VIX with 20 plus years of data shows that markets typically bottom out when VIX hits 35-45, but in black swan events, bottoms may occur at 45-80. A major bottom is usually formed within 2-4 weeks when VIX reaches 40.
(7) The VIX is a useful indicator for long-term investors, especially institutions that have restrictions on risk and losses. When VIX signals increased volatility, they can boost their hedging strategies with puts to protect their investments.
(8) The VIX helps traders in options make decisions based on volatility. When volatility is expected to increase, options become more valuable and buyers benefit. Conversely, when the VIX decreases, option sellers tend to profit as the time value decreases.
(9) Nifty going up & VIX going down signals bullish market, Nifty going down & VIX staying stable still signals bullish, Nifty going up & VIX increasing signals bearish market, Nifty going down & VIX increasing signals bearish market.
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