Can VIX Go over 100? (2024)

FAQs

Can VIX be higher than 100? ›

VIX (CBOE Volatility Index) can theoretically reach any value from zero to positive infinite. It can not be negative, but there it no theoretical limit on the upside. VIX can definitely go over 100.

Theoretically, VIX oscillates between 15 and 35. Any value around or below 15 represents low volatility against values higher than 35, which indicate high fluctuations in the market.

In general, VIX values of greater than 30 are considered to signal heightened volatility from increased uncertainty, risk and investor fear. VIX values below 20 generally correspond to more stable, less stressful periods in the markets.

According to the rule of 16, if the VIX is trading at 16, then the SPX is estimated to see average daily moves up or down of 1% (because 16/16 = 1). If the VIX is at 24, the daily moves might be around 1.5%, and at 32, the rule of 16 says the SPX might see 2% daily moves.

When the VIX is up it can mean that there is increased fear and risk in the market. Conversely, when the VIX is down it can mean that there is more stability in the market. Is there a VIX Index in Canada?

The VIX index measures the expectation of stock market volatility over the next 30 days implied by S&P 500 index options. The current VIX index level as of April 25, 2024 is 15.37.

During periods of market turmoil, the VIX spikes higher, largely reflecting the panic demand for OEX puts as a hedge against further declines in stock portfolios. During bullish periods, there is less fear and, therefore, less need for portfolio managers to purchase puts.

It also cannot move to zero and historically has not gone below nine, which is distinct from equity prices. VIX futures and options should not be used as long-term, buy-and-hold investments.

As a rule of thumb, VIX values greater than 30 are generally linked to large volatility resulting from increased uncertainty, risk, and investors' fear. VIX values below 20 generally correspond to stable, stress-free periods in the markets.

How do you trade when VIX is high? ›

You could do this by opening a position to buy the VIX. If there was volatility, your prediction would have been right, and you could take a profit. However, if you had taken a long position and there was no volatility in the market, your position would have suffered a loss.

The Nasdaq-100 Volatility Index is a financial benchmark designed to measures changes in 30-day implied volatility of the Nasdaq-100 Index as further described in the methodology, rules and other information.

We find that its accuracy hovers between 20% and 25%, depending on sampling period. An alternative framework, built on asymptotic distribution theory (AVE), predicts this volatility with an accuracy between 90% to 95%.

content regarding future volatility.

One such example takes a VIX level below 12 to be “low,” a level above 20 to be “high,” and a level in between to be “normal.” Exhibit 2 illustrates the historical distribution of S&P 500 price changes over 30-day periods after a low VIX, after a high VIX, and after a normal VIX.

That is what we are seeing in the current context with volatility scaling up to 32 levels. It shows that markets can move steeply in either direction, but the more likely direction is down, unless the VIX tapers. This is an important gauge of risk for market traders and also for long term investors.

Volatility Index 75, often abbreviated as VIX 75, is a synthetic index designed to measure market volatility based on the performance of major currency pairs. It is widely traded by forex traders seeking opportunities in highly volatile market conditions.

In general, a VIX reading below 20 suggests a perceived low-risk environment, while a reading above 20 is indicative of a period of higher volatility. The VIX is commonly used to measure investor confidence in the market.

When the VIX is low, volatility is low. When the VIX is high volatility is high, which is usually accompanied by market fear. Buying when the VIX is high and selling when it is low is a strategy, but one that needs to be considered against other factors and indicators.