Looking at close-to-close — as in the difference between closings from one day to the next — helps illustrate how quickly markets can turn. For instance:. Evidently, Monday can be a particularly rocky trading day as markets come back from the weekend and digest news and developments.
While the VIX is broadly applicable across the larger stock market, it may not best represent volatility in certain sectors or time frames. For that, Cboe has a suite of other volatility indices, including:. When certain VIX values are reached, it kicks into motion a dynamic reallocation of the fund so that it can manage the risk of future expected volatility and find returns in the most opportune asset classes.
Yet the VIX is only one of the volatility measures the fund monitors. There are other signals that help direct and guide us so that allocations are optimized amid turbulent markets. Want to learn more about the Magma Capital Funds or how to invest? Contact us today with any questions. Skip to content. What is the VIX? IG accepts no responsibility for any use that may be made of these comments and for any consequences that result.
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Careers IG Group. Inbox Community Academy Help. Log in Create live account. Related search: Market Data. Market Data Type of market. Markets to trade Indices What are indices? What is the VIX and how do you trade it? Find out more. Practise on a demo. What is the VIX? Learn how to understand VIX values.
Why trade the VIX? Learn more about trading volatility. How do you calculate the VIX? Learn how to trade index futures. Decide whether to go long or short on the VIX When you open a position on the VIX, there are two basic positions that you can take: long or short. Going long on the VIX The position you decide to take will depend on your expectation of volatility levels. Open a live account or practise on a demo Creating a live trading account with IG is a straightforward process.
The VIX is an index that measures expectations about future volatility. It tends to rise during times of market stress, making it an effective hedging tool for active traders. When its level gets to 20 or higher, expectations are that volatility will be above normal over the coming weeks. Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
How We Make Money. Editorial disclosure. Brian Baker. Written by. Bankrate reporter Brian Baker covers investing and retirement. He has previous experience as an industry analyst at an investment firm. Baker is passionate about helping people …. Edited By Brian Beers. Edited by. Brian Beers. Brian Beers is the senior wealth editor at Bankrate.
He oversees editorial coverage of banking, investing, the economy and all things money. Share this page. It can be viewed as a complicated average of option prices. Kathryn Christopher has been writing about investments for more than 20 years. Her work has appeared in the "Journal of Alternative Investments" and numerous other academic and industry publications. Stock Options.
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