India VIX (India Volatility Index) Chart

About India VIX (India Volatility Index)

The National Stock Exchange started trading of futures contracts based on the Indian VIX index from 26th February 2014. It provides another effective tool to traders to hedge and protect their positions from the short-term volatility in the markets. To get a better understanding of how these contracts could be used in protecting portfolios it is necessary to analyze and understand how the VIX index works.

India VIX is India’s Volatility Index which is a key measure of market expectations of near-term volatility conveyed by NIFTY stock index option prices. This VIX index is computed by NSE based on the order book of NIFTY Options.

For this, the best bid-ask quotes of near and next-month NIFTY options prices which are traded on the F&O segment of National Stock Exchange are used. India VIX indicate to the investor’s observation of the market volatility within the close to time period which represents the expected market volatility over the subsequent 30 calendar days. Advanced the India VIX values, improved the expected volatility and vice-versa. India VIX uses the calculation method of Chicago Board Options Exchange (CBOE), with suitable modifications to conform to the NIFTY options order book.