{"id":2546,"date":"2022-06-26T01:33:03","date_gmt":"2022-06-25T23:33:03","guid":{"rendered":"https:\/\/cfd-trading-blog.com\/?p=2546"},"modified":"2024-05-26T22:21:13","modified_gmt":"2024-05-26T20:21:13","slug":"cboe-volatility-index-vix-handeln-und-verstehen","status":"publish","type":"post","link":"https:\/\/cfd-trading-blog.com\/en\/cfd-education\/cboe-volatility-index-vix-trade-and-understand\/","title":{"rendered":"VIX - Trade and understand CBOE Volatility Index"},"content":{"rendered":"
The CBOE Volatility Index (ticker symbol: VIX) is a measure of expected volatility in the market. It is sometimes called the fear index because it rises when the market is panicking. It measures the expected volatility of the S&P 500 for the coming days and is calculated using the prices of put and call options on the S&P 500. It is thus a measure of the uncertainty that currently prevails in the market.<\/p>
The Volatility Index is not directly tradable for private investors. However, it is possible to participate in the price development of the VIX via certain financial products. The VIX can also be interesting for trading, as its price fluctuations are very high in uncertain market phases. However, trading with the VIX is not very easy and involves correspondingly high risks.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
The current price of the VIX is calculated and issued by the Chicago Board Options Exchange (CBOE). The most important factors for the calculation of the VIX are the options on the S&P500. Both the standard options on the SPX and the short-dated options are used for this purpose. The standard options have a maturity of one month and expire at the end of each month. The short-dated options on the SPX expire every Friday.<\/p>
On the basis of a certain formula, a value corresponding to the price of the VIX is obtained at the end. Various parameters of the already mentioned options flow into the formula. Here is an overview of the factors influencing the value of the VIX:<\/p>
The VIX stands for the future level of volatility. Due to the calculation by means of call and put options, a condition about the markets can be derived from this. High values of the VIX mean a large volatility, i.e. a large fluctuation range on the markets. The VIX is a continuous indicator and stands for the expected volatility in the next 30 days, related to the previous volatility.<\/p>
The VIX rises when stress on the stock market increases and prices fall. In particular, bad news that leads to large price losses causes the VIX to rise sharply. Even in a bull market, there is bad news that leads to price losses and corrections on the stock markets. These also cause the VIX to rise briefly, but it returns to low levels relatively quickly. In a bear market, however, the VIX can remain at a higher level for a longer period of time.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
If you look at the Course of the VIX in the chart<\/a><\/strong>* over many years, a similar pattern can be seen again and again. While the stock market is in a bull market, the VIX is usually at values below 20. In tense market phases, such as in a bear market or a crisis, the VIX is usually between 20 and 40 for longer periods. In a bear market, one speaks of the capitulation and thus the low point of the bear market when the VIX reaches values above 40. However, in the event of extreme shocks to the market, the VIX can reach much higher values for a short period of time. For example, the VIX reached highs of around 85 at the height of the financial crisis in 2008 and in the Corona Crash in March 2020.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t The VIX is a popular index for trading due to its large fluctuations. There are many trading strategies that focus on the VIX. The large fluctuations offer great opportunities for traders. People like to trade the VIX as a CFD with leverage to take even better advantage of the fluctuations. However, the VIX as a CFD with leverage is a significant risk and can lead to a total loss.<\/p>What can you use the VIX for?<\/strong><\/h2>