The India VIX Index, an indicator of the volatility of the stock market has been plunging after the outbreak of novel coronavirus.
What is Volatility Index?
- Volatility Index is a measure of the market’s expectation of volatility over the near term.
- Volatility is often described as the “rate and magnitude of changes in prices” and in finance often referred to as risk.
- It is a measure, of the amount by which an underlying Index is expected to fluctuate, in the near term, (calculated as annualized volatility, denoted in percentage e.g. 20%) based on the order book of the underlying index options.
India VIX Index
- India VIX is a volatility index based on the NIFTY Index Option prices.
- From the best bid-ask prices of NIFTY Options contracts, a volatility figure (%) are calculated which indicates the expected market volatility over the next 30 calendar days.
- “VIX” is a trademark of Chicago Board Options Exchange, Incorporated (“CBOE”) and Standard & Poor’s.
- The firm has granted a license to NSE to use such mark in the name of the India VIX and for purposes relating to the India VIX.
