The CBOE Volatility Index (VIX) is a volatility calculation index for S&P 500 stocks, which includes the 503 largest US companies. The VIX index was created in the mid-1990s by the Chicago Board Options Exchange (CBOE). It is designed for an authoritative assessment of the ongoing 30-day expected volatility of the US stock market.
The value of the VIX index is the arithmetic average of the current prices of 30-day options on the S&P 500. To calculate the index more accurately, the prices for both the purchase and sale of options are analyzed. The VIX value is measured as a percentage and ranges from 0 to 100. For example, a VIX value of 33 is interpreted as an implied volatility of 33%. The resulting number shows the approximate expected annual change. The higher it is, the stronger the volatility.
Calculating the value of the volatility index is quite complicated, but you do not usually need to calculate it manually. It is calculated automatically in most trading terminals, including the LiteFinance platform.
The S&P 500 VIX index is currently available for trading only on the LiteFinance demo account, but it can be used as an analytical tool. With its help, a trader can determine the current trend and assess the situation in the stock market. In addition, VIX correlates with other indicators, allowing traders to predict their direction.
Risk warning: Trading in FX and CFDs entails high risk of losing capital.
