. Typically addressing, VXX trades like any other asset. As such, it can be sold, bought, or sold short whenever the market is free for trading, and that covers both pre-market and after-market timeframes. The average daily volume consists of 75 million shares, and its liquidity and spread status are very valid; the bid-ask spreads are just a cent.
Learn to scale, shape and trade market shifts with the world’s most extensive array of volatility products and resources.
The VIX Index is a measure of expected future volatility.
Volatility measures the rhythm and degree of price movements, that a financial instrument occurrences over a definite period of time. The tenser the price fluctuations in that instrument, the more eminent the level of volatility. Volatility can be measured using real historical price differences or it can be a measure of assumed future volatility that is implied by options prices.
The VIX Index is used as a gauge for market uncertainty, presenting market participators and observers with an index of the continuous, 30-day expected volatility of the broad U.S. The VIX Index is not directly tradable, although the VIX methodology gives a script for replicating volatility expression with a portfolio of SPX options, a fundamental innovation that led to the creation of tradable VIX futures and options.
For traders, the VIX not only represents a useful tool for assessing risk but also the possibility to profit on volatility itself. Discover how you can trade the VIX – including examples of volatility trading and how to short the VIX.
While the VIX only measures the S&P 500 volatility, it is commonly used as a benchmark for the complete US stock market. The price of options is considered a sound measure of volatility as if something concerns the market, dealers and investors tend to start buying trades, which causes prices to rise. This is why the VIX is also known as the fear index,
In very volatile periods, investors regularly exercise extended care in the markets and vice versa. This innately inversely associates the VIX with the S&P 500. When the S&P 500 goes down, the market translates this as fear in the market, which consequently forces the VIX higher.
Yet, the VIX measures volatility and does not fundamentally indicate expected market direction. Historically, the VIX posted its all-time high of 80.86 on November 20, 2008, which was during the global financial crisis. Its all-time intraday low of 8.56 was posted on November 24, 2017, and the fact that it was Black Friday probably helped impact the VIX. Here are a few of the best brokers for trading VXX Volatility. CFD providers enable retail traders to trade CFDs on the CBOE Volatility Index
Best brokers for trading VXX Volatility (VIX). (2020). Retrieved on September 21, 2020, from https://goodmoneyguide.com/cfd-brokers/best-brokers-for-trading-vxx-volatility/.
Cboe Volatility Index (VIX). (2020). Retrieved on September 21, 2020, from http://www.cboe.com/vix.
VIX Index Trading. (2020). Retrieved on September 21, 2020, from https://www.avatrade.ng/cfd-trading/indices/vix-index.
VXX Trading via CFDs. (2020). Retrieved on September 21, 2020, from https://www.avatrade.co.uk/cfd-trading/etf/vxx-trading.
What is the VIX Volatility Index and How Do You Trade it? | IG UK. (2020). Retrieved on September 21, 2020, from https://www.ig.com/uk/indices/what-is-vix-how-do-you-trade-it.