Volatility and Why VIX Signals Work
What is the VIX?
The VIX is a measurement of the implied volatility of the at the money Index Options.
The VIX Measures FEAR
High VIX readings mean that fear is also high, whereas low VIX readings mean that fear is low. Backtesting various VIX reversal signals has proven that the VIX can be used to predict market direction about 60 to 70% of the time, the more VIX signals the better. What this means is that when the VIX is at an extreme (meaning everyone thinks the market will continue in …
Read the full story »
The VIX is a measurement of the implied volatility of the at the money Index Options.
The VIX Measures FEAR
High VIX readings mean that fear is also high, whereas low VIX readings mean that fear is low. Backtesting various VIX reversal signals has proven that the VIX can be used to predict market direction about 60 to 70% of the time, the more VIX signals the better. What this means is that when the VIX is at an extreme (meaning everyone thinks the market will continue in …
Read the full story »
posted by Bramesh at
10:35 PM
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