InvestorQ : Is it true that the VIX was up sharply on Wednesday and what does that mean?
vidhya Laxmi made post

Is it true that the VIX was up sharply on Wednesday and what does that mean?

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sarah Leo answered.
2 months ago
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You always need to put the VIX in context. Firstly, VIX tends to always spike on a day when the markets are sharply down. Secondly, the VIX tends to spike ahead of expiry as there is still lack of clarity on the roll over and fresh positions in next contract. That is reflected in VIX spiking to higher levels.

After rallying above the 13,000 levels, the Nifty faced its first major resistance on Wednesday as profit booking took over. Nifty fell 196 points to 12,858 and the Sensex tumbled 695 points to 43,828. In terms of value depletion, over Rs.2.2 trillion was wiped out on Wednesday.

The only worry was the sharp spike in India VIX to 23.15 levels. However, traders need not read too much into the temporary spike in VIX. Normally, the VIX is called the Fear Index and a spike shows a spike in fear in the markets. But that is relevant only when there is sustained selling in the markets. This may be more of a one-off as long as it stays below 26, don’t worry too much about VIX.

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