Technical indicator analyzing is more important in F&O trading. Todays topic is India Vix, a volatility index which tells us about the volatility that can be happen in upcoming days. In this blog we learn about its meaning, analyzing and taking trade based on the vix movement.
What is India VIX?
India VIX (Volatility Index) is a measure of the market’s expectation of volatility over the next 30 days. It is calculated by the National Stock Exchange (NSE) using the order book of the NIFTY options (near-month and next-month options).
How is it calculated?
- India VIX is based on the Black-Scholes model.
- It reflects the expected fluctuation (not direction) in the NIFTY 50 index over the next 30 days.
- Higher VIX → Higher expected volatility
- Lower VIX → Lower expected volatility
How to View India VIX Correctly
Direct Source:
- Visit the NSE website → Indices section → India VIX
- Trading platforms like Zerodha, Upstox, and Angel One also show India VIX live data.
Interpretation Guidelines:
- Below 15 → Low volatility → Market is calm/stable
- 15 to 25 → Moderate volatility → Normal market behavior
- Above 25 → High volatility → Fear and uncertainty in the market
- Above 35 → Extreme fear → Potential market crash or massive correction
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How to Trade Based on VIX Movement
1. Low VIX (Below 15) → Bullish/Sideways Market
➡️ Strategy:
- Low volatility = Market confidence
- Trade in favor of the trend (trend-following strategies)
- Ideal for:
- Buying options (since premiums are low)
- Selling spreads to benefit from low movement
2. Moderate VIX (15–25) → Trending Market
➡️ Strategy:
- Trending markets with manageable volatility
- Focus on:
- Directional trades (buy calls or puts)
- Credit spreads (if the market is range-bound)
- Straddle/Strangle if you expect a breakout
3. High VIX (25–35) → Volatile Market
➡️ Strategy:
- Increased fear = Opportunity for quick moves
- Ideal for:
- Option selling (high premiums due to high IV)
- Iron condor or Butterfly spreads to hedge
- Scalping or intraday trades based on market swings
4. Extreme VIX (Above 35) → Panic Mode
➡️ Strategy:
- Market may overreact; sharp rebounds possible
- Ideal for:
- Sell puts at extreme lows (if confident about market reversal)
- Avoid naked calls or puts (due to massive swings)
- Buy protective puts to hedge long positions
🚀 Pro Tips:
✅ Rising VIX + Falling NIFTY → Bearish sentiment → Hedge long positions
✅ Falling VIX + Rising NIFTY → Bullish sentiment → Hold long trades
✅ Rising VIX + Rising NIFTY → Caution → Market confusion or potential reversal
✅ Falling VIX + Falling NIFTY → Weak bearishness → Possible short-covering rally
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