India VIX

vijayabv · #1 17th November 2008, 06:20 PM

Hi,

Everyday NSE is listing the volatility Index,
INDIA VIX at 6 PM on its website.
But is there any website, where we shall see the live India VIX during market hours ?

Does the Price of a Nifty Option get affected by this volatility, or is it only dependent on the Option specific volatility ?

Thankyou,

warm regards,

VIJAY

vijayabv · #2 17th November 2008, 06:48 PM

Hi,

Today's India VIX closed at 85.13 (the highest I had ever seen).
so does that mean that options are expensive ?
will it be worth selling options ?

warm regards,
VIJAY

columbus · #3 17th November 2008, 07:27 PM

Quote:

Originally Posted by Adheer

What it means is that the expectation of volatility is highest. The options have high premiums (due to large expected volatility). The option writers anticipate huge risks and therefore demand huge premium.

In the due course of normal markets, volatility should subside from the peaks and revert to lower volatility - thus enabling you to earn the premium. But we have no idea what lies ahead for the markets.
Perhaps, the Nifty goes up 200 pts and then falls 200 pts on Wednesday. So, on Wednesday it will be where it is today, but it will scare the hell out of you.

So, never try to pick the tops !!

Personally, I never recommend anyone to short calls or puts. Only a sophisticated trader who has good idea of the underlying risk and has hedged his bets should venture into that area.

I recommend that you read two excellent books - "Fooled by Randomness" and "Black Swan" by Nassim Nicholas Taleb, on the above concepts.

Difficult to say if 'market is over-sold' and so options are expensive.

It gives a signal to retail investors to keep away from the market.

The closing of VIX at 85 on absolute terms (63 on average basis for last
month) is quite high.