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VIX (Volatility Index)

23 April 2018 by

The Volatility Index (VIX), is based on the implied volatility of S&P 500 Index options. This volatility is meant to be forward looking, is calculated from both calls and puts, and is a widely used measure of market risk, often referred to as the “investor fear gauge.” The VIX is a contrarian indicator that not only helps investors look for tops, bottoms and lulls in the trend but allows them to get an idea of large market players’ sentiment. This is not only helpful when preparing for trend changes but also when investors are determining which option hedging strategy is best for their portfolio.

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