www.CandlestickForums.com – VIX Fear Index The so called VIX fear index is in the news as the volume of put contracts on the Chicago Board Options Exchange (CBOE) Volatility Index rose to a level of three puts on each call contract. The CBOE Volatility Index itself is a measure of market expectation of coming price movement of the S&P 500 over the coming 30 days. It uses a weighted measure of the prices of puts and calls in the S&P index as its base. The costs of buying puts and buying calls go up with expectation of market volatility and down when traders expect a more tranquil market. When the VIX fear index is high it is indicative of a volatile market. However, an extremely high VIX has often been seen before a market rally extending over a year. Thus the VIX fear factor is not always a fear factor and can be an indicator of better times for the stock market. Since 2006 it has been possible to trade options on the VIX itself. Options traders expecting to see the VIX fall are the ones buying puts on the so called fear index itself. Traders can trade the VIX directly but stock traders more commonly use the VIX fear index as a guide in helping predict market trends or a market correction. Traders using Candlestick analysis for technical analysis of stocks can use the so called VIX fear index as an adjunct to understanding and predicting changes in market sentiment. When the VIX fear index peaked recently, traders, expecting a fall from historic highs, bought puts on the …

car insurance offers