https:\/\/forexhero.info\/<\/a> on market volatility. Astute investors tend to buy options when the VIX is relatively low and put premiums are cheap. However, the VIX can be traded through futures contracts and exchange traded funds (ETFs) and exchange traded notes (ETNs) that own these futures contracts.<\/p>\nThe VIX is a highly touted index on CNBC and in financial circles, but what is it and what does it represent? You may hear it called the “Fear Index”, but that too is a misnomer and not an accurate representation of what it is. Certainly there are times based on the price of this index that it construes fear, but other times it may reflect complacency. As an investor, if you see the VIX rising it could be a sign of volatility ahead. You might consider shifting some of your portfolio to assets thought to be less risky, like bonds or money market funds.<\/p>\n
ETFs and ETNs<\/h2>\n
However, it spiked far beyond reality as panic drove option premiums (insurance prices) into the stratosphere. The VIX suffered huge whipsaws in 2009, 2010, and 2011 trying to over compensate and find some realm of equilibrium between perception and math. If we look at historical points of the VIX we see that during the height of the great housing crisis in 2008 and 2009 the VIX rocketed to levels far above 50.<\/p>\n
Can I buy VIX?<\/h2>\n
It then started using a wider set of options based on the broader S&P 500 Index, an expansion that allows for a more accurate view of investors\u2019 expectations of future market volatility. A methodology was adopted that remains in effect and is also used for calculating various other variants of the volatility index. The index is more commonly known by its ticker symbol and is often referred to simply as \u201cthe VIX.\u201d It was created by the CBOE Options Exchange and is maintained by CBOE Global Markets.<\/p>\n
For our understanding of the model, the options are pricing that the S&P 500 index (the largest 500 companies) will be in a range of +\/- 50% over the year, 68% of the time. The VIX quickly came falling back down and then went too far the other way and fell below 15. Again, during the crisis the VIX would have us believe that all is well and that the S&P 500 index has a very low probability of making any radical moves, again the VIX was wrong and it moved back up.<\/p>\n","protected":false},"excerpt":{"rendered":"
It is driven more by the perception and human condition of fear and greed, than by any other force. One of the most popular and accessible of these is the ProShares VIX Short-Term Futures ETF (VIXY), which is based on VIX futures contracts with a 30-day maturity. The CBOE Volatility Index (VIX) is a real-time […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"_links":{"self":[{"href":"http:\/\/vietdubai.com\/wp-json\/wp\/v2\/posts\/807"}],"collection":[{"href":"http:\/\/vietdubai.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/vietdubai.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/vietdubai.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/vietdubai.com\/wp-json\/wp\/v2\/comments?post=807"}],"version-history":[{"count":1,"href":"http:\/\/vietdubai.com\/wp-json\/wp\/v2\/posts\/807\/revisions"}],"predecessor-version":[{"id":808,"href":"http:\/\/vietdubai.com\/wp-json\/wp\/v2\/posts\/807\/revisions\/808"}],"wp:attachment":[{"href":"http:\/\/vietdubai.com\/wp-json\/wp\/v2\/media?parent=807"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/vietdubai.com\/wp-json\/wp\/v2\/categories?post=807"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/vietdubai.com\/wp-json\/wp\/v2\/tags?post=807"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}