India VIX
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India VIX Performance
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About India VIX
Parent Organization
India VIX
Exchange
NSE
India Vix Today
The Volatility Index (VIX) is a barometer of the market's expectation of volatility over a short-term period. India VIX live, also known as the Fear Gauge/Fear Index, is a non-directional indicator of expected market volatility over the next 30 calendar days. It swings between 15 to 35, with values under 20 signifying low volatility and stable markets. However, since November 2021, there have been instances of VIX levels going above 20, suggesting a shift towards a higher VIX regime due to increased retail participation in the options segment. The highest-ever reading of India's VIX levels was recorded in November 2008 due to the Global Financial Crisis, followed by a reading of 87 in March 2020 due to the COVID situation.
History of the India VIX
The Chicago Board of Options Exchange (CBOE) first developed India VIX in 1993, basing it on the values of its S&P 100 Index option. In 2003, S&P 500 Index options were substituted for the original S&P 100 Index option. The NSE used this approach and modified it to fit the needs of the Indian market; as a result, India VIX was introduced in 2008, and VIX Futures followed in 2014.
Importance of India VIX on the Stock Market
The India VIX live chart is regarded as a reliable gauge of market turbulence and swings. It benefits many traders and investors in the following ways:
Intraday Traders:
It gives them important information about changes in market volatility. This aids people in assessing the market risks associated with equities. When there is significant market volatility, intraday traders may find that their stop-loss orders are triggered, which may cause them to reduce their leverage or widen their stop-loss limits. India VIX's comprehension of market circumstances aids in the making of these crucial judgements.
Those Who Invest for the Long Term:
This index offers significant advantages to long-term investors in addition to intraday traders. They are susceptible to Margin-to-Market (MTM) loss limitations, even if short-term volatility may not have a significant impact on them. As a result, being aware of the volatility index's value can help people make wise investing decisions in the market.
Options Traders:
Given the market's volatility, the India VIX is a reliable indicator to use when deciding whether to purchase or sell an option. Option sellers benefit in less volatile market situations, whereas option purchasers benefit more in more turbulent market scenarios.
Portfolio Managers and Mutual Funds:
The VIX fluctuates to help mutual fund and portfolio managers choose whether to buy low-beta or high-beta equities.
How is India VIX Value Calculated?
In order to allow market participants to assess the influence of even the smallest fluctuations in volatility on prices, the Nifty VIX values are calculated to four decimal places. Data for the following four criteria are needed:
- Computes Nifty VIX chart values up to 4 decimal places to analyze price impact due to minute volatility changes.
- It requires data for four factors: time to expiry, Interest Rate, Forward Index Level, and Bid-Ask Quotes.
- Time to expiry is computed in minutes for a more precise value.
- The forward index level is the NIFTY futures contract's most recent accessible price for the corresponding expiry month.
- The forward index level determines the at-the-money (ATM) strike price, which is used to select out-of-the-money option contracts.
- Bid-ask quotes are used to calculate India VIX share price. If quotes are unavailable, values can be determined through interpolation using "Natural Cubic Spline".
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India VIX FAQs
India VIX is a shorthand for the India Volatility Index. It is a measure of the Nifty 50 index's near-term volatility expectations, especially over the next 30 days.
India VIX is the full name for the India Volatility Index. The India VIX is a volatility index created by the NSE using NIFTY option order book data. This is based on the best bid-ask quotes for near and next-month NIFTY options contracts traded on the NSE's F&O sector.
While market indices such as the Nifty assess the market direction and are evaluated based on the price movements of the underlying equities, a volatility index such as the India VIX shows market volatility and is computed using the underlying index's options order book.
The India VIX is a dependable and sound measure of market volatility and swings, informing intraday traders of the increase and decrease in market volatility. This allows them to assess market risks for shares.
India VIX is an important financial metric in the Indian stock market, expressing the market's volatility expectations for the next month. The name "VIX" stands for Volatility Index, and the India VIX is patterned after the CBOE's VIX.
The National Stock Exchange (NSE) calculates the India VIX index based on the order book of Nifty options. The Black and Scholes model is used to calculate the India VIX's value.
This index is calculated using five factors: the strike price, the stock's market price, the time to expiry, the risk-free rate, and volatility.
At its heart, the India VIX represents market participants' predictions for the future volatility of the Nifty 50 index, India's most renowned stock index, over a short period, often the following 30 days.
VIX futures offer a straight gamble on the projected amount of volatility. Buying or selling VIX futures is one way to express a long or short sentiment. Alternatively, VIX options may offer a comparable way to position a portfolio for prospective increases or declines in expected volatility.