InvestorQ : How does the VIX work in practice and how can a trader get cues from the VIX chart of the Nifty?
rhea Babu made post

How does the VIX work in practice and how can a trader get cues from the VIX chart of the Nifty?

Answer
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1 year ago


A rising VIX indicates that traders expect the NSE Nifty Index to become more volatile and this is an indication of the elevated fear feeling in the market as such. The higher the VIX, the higher the fear, which, according to market contrarians, is considered a buy signal. But the risk of such a strategy is too high. A falling VIX indicates that traders in the options market expect the S&P 500 Index to trade more quietly. In the same respect, the lower the VIX, the lower the fear and indicates a more complacent market.VIX works best at an index level to give you an idea of the macro risks in the market before getting into your micro analysis.