India Vix Meaning & Importance: VIX may be a trademark of the Chicago Board Options Trade (CBOE). India VIX may be a short form for India Volatility Index best sites for indian stock market analysis. In simple terms, it explains the annual volatility that the traders expect over subsequent 30 days within the Nifty50 Index.
The India VIX value springs by using Black & Scholes (B&S) Model. The B&S Model uses five important variables like strike price, market value of the stock, time to expiry, the danger free rate and therefore the volatility best sites for indian stock market analysis. India VIX was introduced by NSE within the year 2008, but the concept of VIX may be a trademark of CBOE (Chicago Board Options Exchange).
What is India Vix?
One simple way of understanding India VIX is that it’s the expected annual change within the NIFTY50 index over a period of 30 days For instance , if the India VIX is currently at 11, this simply means the traders expect 11% volatility for subsequent 30 days. Further, say, if the present index is trading at 9,000 and India VIX trading at 20. So, expected volatility over next year over 30 days will be:
Index spot: 9000
India Vix: 20
Expected downside for the year: 9000- 20% of 9000 i.e., 7200
Expected upside for the year: 9000+ 20% of 9000 i.e., 10800
Here, the expected range for the year is between 7200 and 10800
Quick Note: One shouldn’t confuse India VIX with Market Index best sites for indian stock market analysis. Market Index gives information about the direction of the market but on the opposite hand VIX measures the volatility of the market. Another major difference is that Index is represented in terms of number while the VIX is represented in terms of percentage.
Why is India VIX so important? best sites for indian stock market analysis
All the main directional moves within the market are usually preceded by tons of choppiness or tons of range play within the market best sites for indian stock market analysis. India VIX plays a really major role in understanding the arrogance or fear factor amongst traders.