The VIX is known as the fear index because it is based on the amount of puts that are purchased.
Why?
-The more puts that are purchased on the SP500, the higher the VIX
-When puts are high that means people are buying protection
-They think the market is going down
High v. Low VIX
-High VIX versus low VIX is relative
-It depends whether you’re looking at historical or implied relativity, a high VIX can’t necessarily be determined by its numerical value
-The implied VIX is the state that you are currently in
-Remember: when the VIX is high, it’s time to buy; when the VIX is low, look out below
-The VIX works opposite of the market (but it’s not always 1:1)
-When the VIX is high, stock prices go down because fear impacts selling to the negative side
-When the VIX is low, stock prices start to increase because there is less fear, which means stocks will eventual tumble
-It shows you how much protection people are buying with the puts
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Perfectly expanded. Thank you!
Great Presentation
Hello!
Small question if you may: In adition to the VIX, are there any other indexes, which in combination with the VIX, can help us try and predict where the price of stocks are going to?.
Thank you!.
Spot on since October 1st 2018
I'm pretty sure it's based on the calls and puts not only the puts but I could be wrong..
Oh yeah…I am DEFINITELY subscribing. This guy can teach anything.
allright so what if the vix is volatile itself. What does that mean?
The best explanation of the (faulty) VIX is given in a great book by SHELDON NATENBERG called Option Volatility & Pricing…Second Edition it costs about $100.00, but it could be the best $100.00 you ever spent. Get it Read it……
Dear sasha, I'm having doubts regarding options,
At the end of the trading hours we can see how many 'buying calls contracts and their premium amounts'.. Likewise are we able to see how many 'selling calls contracts have been made and their premium amount'?
you're the best!!!
I wish I had seen this video a couple of days ago! Thanks Sasha. Awesome video
Sasha, I'm not getting it. "When the VIX is high, it's time to BUY". Why should I Buy then the stock price is going Down? What percentage Range of the VIX should I put on a Bullish or Bearish Options Trade? Do you have videos that explain the actual setups of Options trading using the VIX? OTHERWISE, VERY GOOD VIDEO
This is a very very good explanation of the VIX, and you do a very good job of explaining the discrepancies I have seen in the indicator vs the S&P500 for years.
TY!
Very well explained
Is it a good idea to buy the vix?
When the VIX hits 14 or 15, start "scaling in" "some" XIV (or SVXY.) Don't get greedy though. Remember your position sizing.
You're welcome guys. Happy Trading 🙂
Thanks for the explanation. When the fear is less and market is rising, wont people to tend to buy calls, causing option premiums to go up .. and hence implied volatility … and hence VIX ?
I'm confused… Doesn't it tell how much the S&P index is expected to go EITHER way (i.e. VIX value of 25 indicates that the market expects S&P index to go 25% (annualized) up or down with one standard deviation (68% probability), and isn't it based on both put and call options ??? Thank You.
What if someone selling put and call…. .??
I have no idea what I'm doing.
Amazing video!!! Can I just buy the VIX alone vs ETF etc ?
This is good. very good. Had no idea what $VIX was….now I know and understand. Great analysis tool.
Wow Sasha! Thank you so much for your clear examples and explanations. It really makes a lot of since and the drawings and examples make this a lot more understandable for everyday people.
Thanks again.
Thanks for explaining the VIX so simply but with crystal clarity. I have learnt other concepts from you as well and like your teaching style. Keep up the good work, and thank you very much!
Thank you for explaining this in a way that the average person can understand what the VIX is.
good stuff
good video… thanks
good intro, it does seem to raise more questions