Latest news with #VIX
Economic Times
7 hours ago
- Business
- Economic Times
Dalal Street Week Ahead: Cautious optimism prevails over Nifty amid range-bound market setup
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of .) The Nifty traded in a broadly sideways and range-bound manner throughout the previous week and ended the week with a modest decline. The Index oscillated within a narrow 276-point range, between 25144.60 on the higher end and 24918.65 on the lower end, before settling mildly India VIX declined by 3.60% over the week to 11.39, suggesting continued complacency in the markets. On a weekly basis, Nifty ended with a net loss of 181.45 points or (-0.72%).The Nifty is presently consolidating just below a key resistance zone after attempting a breakout above a rising channel. This zone, between 25100 and 25350, has proven to be a supply area where profit-taking has the broader trend remains intact and the Nifty is above key moving averages, it is still within a complex zone of consolidation. This pause in momentum comes after a sharp up move from the lows near 21743 in April.A strong breakout above the 25265 –25350 zone, with a closing confirmation, may resume the uptrend. Conversely, a sustained move below 24750 could trigger incremental weakness and drag the Nifty towards lower we head into the new week, the markets may see a cautious start amid the current range-bound setup. The immediate resistance is at 25150, followed by 25400. On the lower side, the key support zones are placed at 24750 and further near weekly RSI stands at 56.54 and remains neutral without showing any divergence against price. It has made a fresh 14-period low, which is bearish. The MACD remains above its signal line on the weekly chart, continuing to indicate a positive crossover. No significant candlestick formation was observed for the a pattern analysis perspective, Nifty is trading just below the upper bound of a rising channel that it had briefly broken out of. With the Index slipping below the support levels of 25000-25150, it faces resistance at this zone again, failing to follow through on the breakout. Price action is still above the 20-week and 50-week moving averages, maintaining a bullish undertone from a medium-term perspective. However, the ongoing sideways action indicates a lack of fresh directional the current technical structure, it would be prudent for traders to remain selective and protect profits at higher levels. The markets are not displaying signs of aggressive strength, and unless there is a convincing move above 25350, a stock-specific approach with tight risk management is advised. Traders may avoid aggressive fresh buying until a directional move is clearly established. Cautious optimism, with a focus on stocks exhibiting stronger relative strength, is the ideal approach for the coming our look at Relative Rotation Graphs®, we compared various sectors against the CNX500 (NIFTY 500 Index), representing over 95% of the free-float market cap of all the listed stocksRelative Rotation Graphs (RRG) show that the Nifty Media and the Metal Index have rolled inside the leading quadrant. The Midcap 100, Realty, and PSU Bank Index are also inside the leading quadrant. These groups are likely to relatively outperform the broader Nifty 500 Nifty Bank, PSE, and the Financial Services Index are inside the weakening quadrant. They may experience a decline in relative performance compared to the broader Nifty Services Sector Index, Pharma, Consumption, and the FMCG Index continue to languish inside the lagging quadrant. Among these groups, the Pharma Index shows improvement in its relative momentum against the broader IT Index is inside the improving quadrant; it continues to improve its relative momentum against the benchmark. The Auto Index, which is also inside the improving quadrant, is seen deteriorating in relative Note: RRG™ charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of and and is based in Vadodara. He can be reached at : Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
7 hours ago
- Business
- Time of India
Dalal Street Week Ahead: Cautious optimism prevails over Nifty amid range-bound market setup
The Nifty traded in a broadly sideways and range-bound manner throughout the previous week and ended the week with a modest decline. The Index oscillated within a narrow 276-point range, between 25144.60 on the higher end and 24918.65 on the lower end, before settling mildly lower. The India VIX declined by 3.60% over the week to 11.39, suggesting continued complacency in the markets. On a weekly basis, Nifty ended with a net loss of 181.45 points or (-0.72%). 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This zone, between 25100 and 25350, has proven to be a supply area where profit-taking has emerged. While the broader trend remains intact and the Nifty is above key moving averages, it is still within a complex zone of consolidation. This pause in momentum comes after a sharp up move from the lows near 21743 in April. Live Events A strong breakout above the 25265 –25350 zone, with a closing confirmation, may resume the uptrend. Conversely, a sustained move below 24750 could trigger incremental weakness and drag the Nifty towards lower supports. As we head into the new week, the markets may see a cautious start amid the current range-bound setup. The immediate resistance is at 25150, followed by 25400. On the lower side, the key support zones are placed at 24750 and further near 24380. The weekly RSI stands at 56.54 and remains neutral without showing any divergence against price. It has made a fresh 14-period low, which is bearish. The MACD remains above its signal line on the weekly chart, continuing to indicate a positive crossover. No significant candlestick formation was observed for the week. From a pattern analysis perspective, Nifty is trading just below the upper bound of a rising channel that it had briefly broken out of. With the Index slipping below the support levels of 25000-25150, it faces resistance at this zone again, failing to follow through on the breakout. Price action is still above the 20-week and 50-week moving averages, maintaining a bullish undertone from a medium-term perspective. However, the ongoing sideways action indicates a lack of fresh directional conviction. Given the current technical structure, it would be prudent for traders to remain selective and protect profits at higher levels. The markets are not displaying signs of aggressive strength, and unless there is a convincing move above 25350, a stock-specific approach with tight risk management is advised. Traders may avoid aggressive fresh buying until a directional move is clearly established. Cautious optimism, with a focus on stocks exhibiting stronger relative strength, is the ideal approach for the coming week. In our look at Relative Rotation Graphs®, we compared various sectors against the CNX500 (NIFTY 500 Index), representing over 95% of the free-float market cap of all the listed stocks Relative Rotation Graphs (RRG) show that the Nifty Media and the Metal Index have rolled inside the leading quadrant. The Midcap 100, Realty, and PSU Bank Index are also inside the leading quadrant. These groups are likely to relatively outperform the broader Nifty 500 Index. The Nifty Bank, PSE, and the Financial Services Index are inside the weakening quadrant. They may experience a decline in relative performance compared to the broader markets. The Nifty Services Sector Index, Pharma, Consumption, and the FMCG Index continue to languish inside the lagging quadrant. Among these groups, the Pharma Index shows improvement in its relative momentum against the broader markets. The IT Index is inside the improving quadrant; it continues to improve its relative momentum against the benchmark. The Auto Index, which is also inside the improving quadrant, is seen deteriorating in relative momentum. Important Note: RRG™ charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals. Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of and and is based in Vadodara. He can be reached at ( Disclaimer : Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
10 hours ago
- Business
- Time of India
How Volatility Index (VIX) empowers traders with forward-looking view of risk
Tired of too many ads? Remove Ads What is India VIX and why Is it Important? Tired of too many ads? Remove Ads How is India VIX calculated? Interpreting VIX Levels: What Does a Number Mean? Historical Levels of VIX since May 2008 Tired of too many ads? Remove Ads India VIX and Nifty: A Negative Correlation Correlation of VIX with Nifty since May 2008 How VIX Moves Differently During Nifty's Gains and Losses Average Movement in VIX Levels in relation to Nifty since May 2008 Average Daily Change in Nifty Relative Average Daily Change in VIX < -5% 9.30% -5% to -3% 9.61% -3% to 0% 2.03% 0% to 3% -1.67% 3% to 5% -3.61% > 5% -1.46% Don't Ignore Volatility (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of .) The concept of a Volatility Index (VIX) was first introduced by the Chicago Board Options Exchange (CBOE) in 1993. Originally, based on the S&P 100 index, it was revised in 2003 to track the S&P 500 options, and soon gained popularity as the market's "Fear Gauge." It provided investors with a real-time estimate of expected market volatility derived from option the utility of this indicator, the National Stock Exchange (NSE) of India launched its own version called the India VIX in 2008, using the methodology licensed from the CBOE. The India VIX is based on the Nifty 50 Index options and represents the market's expectation of volatility over the next 30 calendar launch was driven by the increasing complexity in Indian capital markets, the rise in derivatives trading, and the need for a standardized metric to measure implied volatility, thereby empowering investors with a forward-looking view of VIX is a measure of implied volatility derived from option prices, which captures the market's collective expectation of near-term volatility. Unlike traditional equity indices that measure price levels, the VIX reflects sentiment and anticipated market fluctuations. Specifically, India VIX uses order book data from near and next-month Nifty 50 index options traded on the NSE.A VIX reading of 15, for instance, implies an annualized expected volatility of 15% over the next 30 days. The importance of VIX lies in its ability to serve as an indicator of expected market volatility. Higher VIX values correspond with greater uncertainty, while lower readings may imply market stability. Market participants, including institutional investors and asset managers, often monitor the VIX as one of several indicators to perform risk management, hedging strategies, and tactical asset allocation decisions. India VIX is one of many tools that can provide context on changing market calculation of India VIX is rooted in a methodology adopted from the CBOE, tailored to suit the Indian derivatives market. It involves using bid-ask quotes of out-of-the-money (OTM) call and put options from the near and next-month expiry contracts of the Nifty 50 index. These OTM options are chosen because they are more sensitive to volatility expectations and provide a clearer picture of anticipated market movements. For each selected option strike, the midpoint of the bid and ask price is computed. These midpoints are then weighted based on strike intervals, adjusted for the risk-free interest rate, and aggregated to calculate the variance. Finally, the result is annualized to yield the India simpler terms, India VIX quantifies the level of implied volatility embedded in the premiums of Nifty options. When traders expect high volatility, they are willing to pay more for protection, which in turn raises the VIX value.: NSE, MO AMC. Data as on 17th June VIX values can be interpreted to understand prevailing market sentiment. Generally, a VIX reading below 13 signifies a calm market with low expected volatility, while a range of 13 to 17 is considered normal. Values between 17 and 25 suggest increasing nervousness among investors, and a VIX above 25 indicates elevated volatility and potential market turbulence. These levels act as critical signals for asset managers and retail investors researchers have also explored how VIX can be used for timing strategies between large-cap and mid-cap segments. A rising VIX typically favors a shift towards large-cap exposure, while a falling VIX can encourage allocation to mid-caps and lowest India VIX level was recorded in July 2023 at around 10.14, during a period of market consolidation. In the following 12 months, the Nifty delivered a strong return of approximately 26.4%, reflecting investor confidence during low volatility. In contrast, the highest VIX levels were seen during major global shocks – above 85 in November 2008 during the Global Financial Crisis, and over 80 in March 2020 during the COVID-19 these periods of elevated volatility, markets rebounded sharply. After the 2008 spike, the Nifty returned about 80.8% over the next year. Similarly, after the COVID-induced VIX surge, the Nifty posted a strong recovery of nearly 83.6%. These patterns show that extreme volatility often precedes strong market rallies.: NSE, MO AMC. Data as on 17th June India VIX has exhibited a strong negative correlation with the Nifty 50 Index. When the Nifty experiences a sharp decline, the VIX typically spikes, reflecting heightened uncertainty fear and increased demand for protective derivatives. Conversely, during market rallies, VIX tends to fall, indicating reduced average correlation between Nifty and India VIX is -0.41 based on the data analysed since 2008. This inverse relationship makes India VIX a valuable tool for hedging, especially for passive and index investors who seek to protect portfolios from adverse studies have also emphasized the asymmetrical nature of VIX's relationship with market returns – it reacts more sharply to market downturns than to example, on 7th April 2025, India VIX surged by 65% when the Nifty dropped 3.24% due to global uncertainties. In contrast, on 28th October 2008, even as the Nifty jumped 6.35%, VIX fell by around 33%. This pattern illustrates that VIX reacts more aggressively to market declines than to market gains.: NSE, MO AMC. Data as on 17th June asymmetrical relationship between Nifty and VIX is evident in how VIX levels respond across different ranges of Nifty's average daily the Nifty falls, especially during sharp declines, VIX tends to rise significantly. For instance, if Nifty drops by more than 5%, the VIX shoots up by an average of 9.3%. Similarly, for a fall between 3% and 5%, the VIX still increases by around 9.6%. This indicates a strong spike in market uncertainty during negative events. On the other hand, when the Nifty rises, the VIX does not drop as sharply. For example, in cases where the Nifty gains more than 5%, the VIX decreases only by about 1.5%. Even for gains between 3% and 5%, VIX drops by just 3.6%.This pattern highlights that VIX is considerably more sensitive to market declines than to rallies. The market tends to react more strongly to downside risk than to upward movements. This imbalance reinforces why volatility indices are seen as early warnings for downside risk and not for upside is not merely a risk factor but a dimension of the market that holds valuable insights. The India VIX serves as a transparent, real-time indicator of investor sentiment and expected market fluctuation. For index fund investors, ETF product managers, and mutual fund professionals, integrating VIX into investment frameworks can offer a strategic advantage. Whether it is used for hedging, asset allocation, or sentiment monitoring, the importance of VIX cannot be India's financial markets evolve, the inclusion of volatility-linked products like a VIX ETF could deepen the passive investment landscape and provide new tools for portfolio resilience. While challenges remain, the foundation is already in place. With thoughtful design and education, volatility could indeed become a tradable and manageable asset class.
Economic Times
10 hours ago
- Business
- Economic Times
How Volatility Index (VIX) empowers traders with forward-looking view of risk
What is India VIX and why Is it Important? Live Events How is India VIX calculated? Interpreting VIX Levels: What Does a Number Mean? Historical Levels of VIX since May 2008 India VIX and Nifty: A Negative Correlation Correlation of VIX with Nifty since May 2008 How VIX Moves Differently During Nifty's Gains and Losses Average Movement in VIX Levels in relation to Nifty since May 2008 Average Daily Change in Nifty Relative Average Daily Change in VIX < -5% 9.30% -5% to -3% 9.61% -3% to 0% 2.03% 0% to 3% -1.67% 3% to 5% -3.61% > 5% -1.46% Don't Ignore Volatility (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel The concept of a Volatility Index (VIX) was first introduced by the Chicago Board Options Exchange (CBOE) in 1993. Originally, based on the S&P 100 index, it was revised in 2003 to track the S&P 500 options, and soon gained popularity as the market's "Fear Gauge." It provided investors with a real-time estimate of expected market volatility derived from option the utility of this indicator, the National Stock Exchange (NSE) of India launched its own version called the India VIX in 2008, using the methodology licensed from the CBOE. The India VIX is based on the Nifty 50 Index options and represents the market's expectation of volatility over the next 30 calendar launch was driven by the increasing complexity in Indian capital markets, the rise in derivatives trading, and the need for a standardized metric to measure implied volatility, thereby empowering investors with a forward-looking view of VIX is a measure of implied volatility derived from option prices, which captures the market's collective expectation of near-term volatility. Unlike traditional equity indices that measure price levels, the VIX reflects sentiment and anticipated market fluctuations. Specifically, India VIX uses order book data from near and next-month Nifty 50 index options traded on the NSE.A VIX reading of 15, for instance, implies an annualized expected volatility of 15% over the next 30 days. The importance of VIX lies in its ability to serve as an indicator of expected market volatility. Higher VIX values correspond with greater uncertainty, while lower readings may imply market stability. Market participants, including institutional investors and asset managers, often monitor the VIX as one of several indicators to perform risk management, hedging strategies, and tactical asset allocation decisions. India VIX is one of many tools that can provide context on changing market calculation of India VIX is rooted in a methodology adopted from the CBOE, tailored to suit the Indian derivatives market. It involves using bid-ask quotes of out-of-the-money (OTM) call and put options from the near and next-month expiry contracts of the Nifty 50 index. These OTM options are chosen because they are more sensitive to volatility expectations and provide a clearer picture of anticipated market movements. For each selected option strike, the midpoint of the bid and ask price is computed. These midpoints are then weighted based on strike intervals, adjusted for the risk-free interest rate, and aggregated to calculate the variance. Finally, the result is annualized to yield the India simpler terms, India VIX quantifies the level of implied volatility embedded in the premiums of Nifty options. When traders expect high volatility, they are willing to pay more for protection, which in turn raises the VIX value.: NSE, MO AMC. Data as on 17th June VIX values can be interpreted to understand prevailing market sentiment. Generally, a VIX reading below 13 signifies a calm market with low expected volatility, while a range of 13 to 17 is considered normal. Values between 17 and 25 suggest increasing nervousness among investors, and a VIX above 25 indicates elevated volatility and potential market turbulence. These levels act as critical signals for asset managers and retail investors researchers have also explored how VIX can be used for timing strategies between large-cap and mid-cap segments. A rising VIX typically favors a shift towards large-cap exposure, while a falling VIX can encourage allocation to mid-caps and lowest India VIX level was recorded in July 2023 at around 10.14, during a period of market consolidation. In the following 12 months, the Nifty delivered a strong return of approximately 26.4%, reflecting investor confidence during low volatility. In contrast, the highest VIX levels were seen during major global shocks – above 85 in November 2008 during the Global Financial Crisis, and over 80 in March 2020 during the COVID-19 these periods of elevated volatility, markets rebounded sharply. After the 2008 spike, the Nifty returned about 80.8% over the next year. Similarly, after the COVID-induced VIX surge, the Nifty posted a strong recovery of nearly 83.6%. These patterns show that extreme volatility often precedes strong market rallies.: NSE, MO AMC. Data as on 17th June India VIX has exhibited a strong negative correlation with the Nifty 50 Index. When the Nifty experiences a sharp decline, the VIX typically spikes, reflecting heightened uncertainty fear and increased demand for protective derivatives. Conversely, during market rallies, VIX tends to fall, indicating reduced average correlation between Nifty and India VIX is -0.41 based on the data analysed since 2008. This inverse relationship makes India VIX a valuable tool for hedging, especially for passive and index investors who seek to protect portfolios from adverse studies have also emphasized the asymmetrical nature of VIX's relationship with market returns – it reacts more sharply to market downturns than to example, on 7th April 2025, India VIX surged by 65% when the Nifty dropped 3.24% due to global uncertainties. In contrast, on 28th October 2008, even as the Nifty jumped 6.35%, VIX fell by around 33%. This pattern illustrates that VIX reacts more aggressively to market declines than to market gains.: NSE, MO AMC. Data as on 17th June asymmetrical relationship between Nifty and VIX is evident in how VIX levels respond across different ranges of Nifty's average daily the Nifty falls, especially during sharp declines, VIX tends to rise significantly. For instance, if Nifty drops by more than 5%, the VIX shoots up by an average of 9.3%. Similarly, for a fall between 3% and 5%, the VIX still increases by around 9.6%. This indicates a strong spike in market uncertainty during negative events. On the other hand, when the Nifty rises, the VIX does not drop as sharply. For example, in cases where the Nifty gains more than 5%, the VIX decreases only by about 1.5%. Even for gains between 3% and 5%, VIX drops by just 3.6%.This pattern highlights that VIX is considerably more sensitive to market declines than to rallies. The market tends to react more strongly to downside risk than to upward movements. This imbalance reinforces why volatility indices are seen as early warnings for downside risk and not for upside is not merely a risk factor but a dimension of the market that holds valuable insights. The India VIX serves as a transparent, real-time indicator of investor sentiment and expected market fluctuation. For index fund investors, ETF product managers, and mutual fund professionals, integrating VIX into investment frameworks can offer a strategic advantage. Whether it is used for hedging, asset allocation, or sentiment monitoring, the importance of VIX cannot be India's financial markets evolve, the inclusion of volatility-linked products like a VIX ETF could deepen the passive investment landscape and provide new tools for portfolio resilience. While challenges remain, the foundation is already in place. With thoughtful design and education, volatility could indeed become a tradable and manageable asset class.
CNBC
a day ago
- Business
- CNBC
A simple options strategy that defines investor risk as the S&P 500 reaches new heights
Markets remain in melt-up mode as shorts run for cover. U.S. equities opened higher once again on Friday morning after the S & P 500 and Nasdaq 100 both notched another closing all-time high on Thursday. That is the S & P 500's ninth record close of the year. I believe the S & P 500 will continue to move higher this summer, but I want to use options on SPDR S & P 500 ETF Trust (SPY) to define risk in the event the underinvested and shorts take a break from chasing stocks higher. Another catalyst that has been added into the bull case is the continued lowering inflationary data (or lack of inflation appearing from trade tariffs) coupled with robust initial Q2 earnings reports. Although it's early in the earnings season as the big banks just kicked off the reporting period this week, 51 of the 55 companies that have reported earnings since the start of season this week have beaten consensus analyst EPS estimates. That's a beat rate of 93%, well above the 20-year average beat rate of 63%, Bespoke Investment Group data shows. Optimism abound, but I believe it is also prudent to define risk when investors experience a severe sentiment shift as markets have endured since April. As many strategists tripped over themselves to lower their 2025 S & P 500 price targets subsequent the "liberation day" initial trade tariff sell-off, that highlighted a buying opportunity as the VIX vaulted over 60. Now that these same analysts are readjusting their S & P 500 price targets significantly higher, I have short-term caution on how much more room this melt up may have. However, there is a record amount of money sitting in cash potentially looking to get back in the equity markets and moreover, that is why I prefer to use options to define that risk and exposure. Normally, I would like to utilize a call spread to reduce cost into upside participation. Due to the parabolic move that we have witnessed since the S & P 500 kissed 4,800 in April, I do not want to limit my upside here and I am comfortable risking the (expensive) amount I am paying for this upside call I am buying. Owning the call is more strategic than owning SPY at these levels. I am also using this as a stock replacement strategy as I am closing some of my long SPY position. Buying a SPY call option Bought the Aug. 29 SPY $630 call for $12.90 This call option is a debit of $1,290 This trade was executed when SPY was roughly trading $629 DISCLOSURES: Kilburg is long these $630 calls, long SPY All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
