What is volatility index?
The Volatility Index was introduced in an academic paper by Brenner and Galai, published in Financial Analysts Journal, July/August 1989.
VIX is the ticker symbol and the popular name for the Chicago Board Options Exchange's CBOE Volatility Index, a popular measure of the stock market's expectation of volatility based on S&P 500 index options.
India VIX or India Volatility Index was launched by the National Stock Exchange (NSE) in 2008 followed by NVIX Futures in 2014.
What is India VIX?
Volatility Index measures the volatility of the market and is calculated using the order book of the underlying index’s options.
The volatility index based on the order books of Nifty futures and options is known as India VIX.
India VIX indicates the Indian market’s volatility from the investor’s perception. It is calculated on the basis of the best bid-ask quotes and expected volatility figure for the next 30 days with the options order book of NIFTY.
Like other indexes, one cannot buy the VIX directly. Instead investors can take position in VIX through futures or options contracts.
Important link to india VIX
Interesting facts about India VIX:
1. India VIX also has a strong negative correlation with Nifty. Every time India VIX falls, Nifty rises and when India VIX rises, Nifty is bound to fall.
2. India VIX rose to its highest level since the 2008 global financial crisis as fear gripped markets worldwide after COVID-19 was declared a ‘pandemic’.
3. A higher value of India VIX indicates higher volatility expectations.
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