Dow Jones Jan 08 You can either cower in fear or you can be emboldened and invest anyway, believing that there is still potential on the horizon. Fear is on the horizon. Being able to see ahead to the next thirty days is a huge boost for traders. So what is the India VIX?

Portfolio Hedging

The square root of the computed variance value is multiplied by to arrive at the India VIX value. Stock Market Message Board. Guys, Buying volume is 1. An evening walk down Dalal Street Sensex gains pts, Nifty ends above 10, on global cues. Jayant Manglik of Religare Broking advises investors to stay focused on selective blue chip companies while traders should strictly hedge their leveraged positions.

Dow Jones Jan Nikkei Jan 9. Straits Times Jan 9. Hang Seng Jan 9. Taiwan Index Jan 9. Designed especially for traders looking to tap the profit opportunities of volatile markets.

Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express writtern permission of moneycontrol. Verify your Moneycontrol account. The factors considered in the computation of India VIX are mentioned below: Lower the India VIX values, lower the expected volatility and vice versa. Lets explore it further. So do you want to know where the term VIX came from? The India VIX came about only a few years ago. Thankfully its not need as it is not the important part.

What is of interest to traders and investors is that the VIX can predict the volatility expected in the market. For example, if India VIX is So if Nifty is presently at the expected range of Nifty for 1 year is between and Where is the lower end and is the upper end. But thats not all, you also calculate the expected volatility of the Nifty for an even shorter time frame using the India Vix. The formula for that is VIX divided by the square root of T.

Based on the value of India VIX which was taken above This information is extremely valuable for Nifty Options traders as you can sell options above and below this range and make money.

What is of interest to traders and investors is that the India VIX can predict the volatility expected in the market. Ultimately, the VIX is going to tell you how much fear there is in the market, and also complacency.

Being able to see ahead to the next thirty days is a huge boost for traders. VIX futures provide market participants with a variety of opportunities to implement their view using volatility trading strategies, including risk management, alpha generation and portfolio diversification.

VIX futures and options have unique characteristics and behave differently than other financial-based commodity or equity products. Understanding these traits and their implications is important. VIX futures and options may provide market participants with flexibility to hedge a portfolio, employ strategies in an effort to generate returns from relative pricing differences, or express a bullish, bearish or neutral outlook for broad market implied volatility.

One of the biggest risks to an equity portfolio is a broad market decline. Consequently, a long exposure to volatility may offset an adverse impact of falling stock prices. Market participants should consider the time frame and characteristics associated with VIX futures and options to determine the utility of such a hedge. VIX futures provide a pure play on the level of expected volatility.

Expressing a long or short sentiment may involve buying or selling VIX futures. Alternatively, VIX options may provide similar means to position a portfolio for potential increases or decreases in anticipated volatility. Over long periods, index options have tended to price in slightly more uncertainty than the market ultimately realizes.

Market participants have used VIX futures and options to capitalize on this general difference between expected implied and realized actual volatility, and other types of volatility arbitrage strategies. One of the unique properties of volatility — and the VIX Index — is that its level is expected to trend toward a long-term average over time, a property commonly known as "mean-reversion.