INDIA VOLATILITY INDEX

18 giu

Hello & welcome to this analysis

On the eve of FOMC meet tonight, India VIX is surprisingly muted despite the Middle East crises and the threat of further Tariff war.

A declining to muted volatility index is overall bullish for equities but not so much for OPTION buyers as movements are either staggered or sideways in the index (Nifty has been sideways since MAY 15) as stock specific action takes place.

As long as VIX remains below 15 it could further slide down towards 13.25 and below that 12 where we have several cases of VIX bottoming and Index topping out. Above 15 it could take a dash for 17.

if VIX continues to decline then option trend buying would be better off with strategies where one can hedge to reduce cost. Also keep in mind as it continues to slide down OTM premiums will remain low that might make your winning % higher but yields much lower in OTM strangles.

All the best

l’altro ieri

Trade attivo

India VIX approaching historic low levels where it tends to bottom out.

Normally we associate VIX inverse to bullish trend - but it is not always necessary that both will switch trends right away.

VIX could consolidate for a longer period (as noticed in the past) as Equities rally before topping out)

From here onwards the likelihood of trending moves should increase making it more of an option buyers market as VIX gradually rises.