Volatility Index (VIX)

[columbus]

Presently the average VIX for the current month stands
at 41 versus last month's 33.50.Since 2 days the volatility
is very high (55+) .Couple of months back high volatility
was seen in the market on 3 days(50+).At that time the
volatility was due to high BEARISH sentiment.The present
high volatility can be ascribed to Bullish sentiment.In present
case the volatility was slowly building from 35 level to 55 level
over last 10 trading sessions.

 

[AW10]

Bullish sentiment, in this market ??
Another name of VIX is fear index so it is always related to Bears / Bottoms/ Panic.
It does not reflect Bulls /Peaks /Greed very well.

Historically, when ever VIX peaked, we had market bottoms. We never had high vix when market was making new highs. Eg. - on 9th Jan, when mkt was at 6287, VIX was below 30, but when market crashed around 15 Jan, VIX started going up (i.e fear increased) and peaked around 29/Jan with value above 50. Here, market made the bottom on 22/Jan and started consolidating, but it took some time for VIX to come down (i.e. fear to disappear).
Similar situation was there in July as well where VIX peaked when the market has already started recovery. With that background, we should see VIX coming down now as market starts recovery/consolidation. Generally there is lag of about 5 to 6 days between market Lows and VIX peak. Helps a lot in Options trading.

Happy Trading.

 

[columbus]

Funny enough VIX (Fear Index ???)of today is only 45.50, when it was
in the range 54~57 during last 4 days.

 

[xtalk]

Funny enough VIX (Fear Index ???)of today is only 45.50, when it was
in the range 54~57 during last 4 days.

Yes, for the last 2 days VIX fallen from 54 to 45 and its because we're falling in straight line! We ain't attempting any recovery hence no major volatility (i guess).

 

[columbus]

Highest closing (67.50) since the Volatility Index introduced by NSE ,sometime in APRIL of this year.

 

[columbus]

Highest ever closing so far (70.27) since the Volatility Index introduced by NSE. Previously ,the recent fall was associated with high values of this index.

 

[columbus]

Ride the rally with extreme caution ,since VIX is above 60 for last 6 days.

 

[pons]

Hi coloumbs....

Yes VIX index still remains in the range of 62 to 70 for last six days....
will it means still painful down trend is there....

When it will come to a stable one... which is the limit can we re-entry in market?

 

[columbus]

Hi coloumbs....

Yes VIX index still remains in the range of 62 to 70 for last six days....
will it means still painful down trend is there....

When it will come to a stable one... which is the limit can we re-entry in market?

Last one month average VIX stands at 53 and previous month average it was 34, I think a long way to go.

 

[AW10]

Hi coloumbs....

Yes VIX index still remains in the range of 62 to 70 for last six days....
will it means still painful down trend is there....

When it will come to a stable one... which is the limit can we re-entry in market?

Trade the market for price action.. and use VIX as additional info .. Though VIX is high.. but still there are ample of trading opportunities available in the mkt.

High VIX is not bad.. specailly for option seller, this brings in additional premium. Options get costlier because the Seller wants more money to cover the risk of high uncertainlty.
Generally we see only spikes in VIX chart towards the higher level and it comes back to normal range.. but that is not true in current market situation. The VIX (in US or in Indian mkt) is stuck in higher range. There is historical comparision available for this type of extreme bearish sentiment. US VIX was launched in 1993. so it does not cover the extreame of 1987 crash..

It is useful tool.. but not sufficient to take trading decision.

Happy Trading.