All about India VIX

 

Not only does the VIX tell you a lot about what’s happening right now, it also lets you look at the past. You can compare the current value to the 52 week high and low of the values and then make your trading decision. If it is closer to the lower band then you can expect a huge rally coming up in Nifty soon and similarly you can exit your positions if the value is touching the upper band. You can form numerous trading strategies based on the India VIX, the sky is the limit here.

The India VIX is seriously benign in nature, and thats why you need to have it on your radar. What happens when traders are complacent for too long? Fear is on the horizon.

Checking the VIX is a great way to see the sentiment of the market and where things are inevitably
headed. Do we have a choppy market on the horizon? The VIX is going to tell you just that.

So in essence the VIX is great tool.

India VIX Futures

Just like NIFTY, India VIX is an index and you can only use derivative (F&O) contracts to trade on them. So to trade in India VIX you need to trade in India VIX Futures. It can be mainly used to diversify your portfolio as well as for volatility trading.

Symbol of the Underlying- INDIAVIX

Expiry date – Every Tuesday of the Week.

Contract cycle - Weekly – 3 contracts per week.

India Vix Lot size – 550

Quotation Price - India VIX Index * 100

Price steps for contracts – 0.25

Base Price – Daily Settlement Price of the contract.

Settlement price : Closing Price of the underlying India VIX index

Settlement procedure : Cash

Normal Trading Hours – Mon-Fri 9:15 AM to 03:30 PMIndia Vix (NSE:INDIAVIX) – Everything you need to know

The Indian Stock Market is volatile right now. It is expected to be volatile throughout the year 2018. That leads to two different approaches. You can either cower in fear or you can be emboldened and invest anyway, believing that there is still potential on the horizon. No matter what approach you choose, India VIX is turning heads and making people talk.

So what is the India VIX? That is exactly what this article is going to explain. At the time of writing this, India VIX is hovering around 14.2. That means that people still have a lot of confidence in it. Should you? You will be sure about it after reading this article.What is India VIX?

This is the symbol for the India Volatility Index. It provides a quantitative value to the volatility anticipated in the Indian Stock Market in the short term. The short term assumed here is considering the next 30 days. Lower the India VIX values, lower the expected volatility and vice versa. Sounds interesting ? Lets explore it further.

So do you want to know where the term VIX came from? Chicago Board Options Exchange or in short CBOE invented it 1993. CBOE granted permission for its usage to the NSE, and there you have it. The India VIX came about only a few years ago.

India VIX Calculation

The Black-Scholes Model is where the VIX calculation actually comes from. Now, not to confuse you, but there’s a serious amount of math involved in this calculation. Thankfully its not need as it is not the important part.

What is of interest to traders and investors is that the VIX can predict the volatility expected in the market.

India VIX Example

For example, if India VIX is 14.2 , this depicts a probable annual variation of 14.2% in the Nifty over the next 30 days. So, the value of Nifty is expected to be in a range between +14.2% and -14.2% from the present price of Nifty for the next 1 year for the next 30 days. So if Nifty is presently at 10000 the expected range of Nifty for 1 year is between 10142 and 9858. Where 9858 is the lower end and 10142 is the upper end.

But thats not all, you also calculate the expected volatility of the Nifty for an even shorter time frame using the India Vix.