India Vix analysis for shorting strikes

13 окт. 2021 г.

India vix is an volatility index of an nifty 50
- India Vix shows the expected volatility for next one year
🛑
- currently india vixis at 15.62 (IST 12:02 PM)
-market is raising but volatility is falling
- sudden drop or rise will increases the volatility/vix otherwise Vix will be flat

🛑 what is 15.62means ?
- well, it is expected volatility for next one from today it means nifty can go up by +15.62 % or it may can go down by - 15.62% (for next one year)
- it doesn't include any global sentiment or news

-now we can calculate expected volatility for next one month and even we can calculate for next day also
- Question is what is the use from it ?
- well, it tells us that it may can stays in between mine range when market is choppy / range bound
- and it will gives us shorting strikes to do the short strangle

-then if you needed range for next one month then , use this formula
Vix /sqrt (12) = x%
where - 12 is number of month ( standard vix is calculated for one year )

for ex, vix = 15.62 , sqrt(12) = 3.46
15.62/3.46 = 4.5 %
means from today's market close to next one month nifty can go up by +4.5% or it may can go down by -4.5% .
using this we can do short strangle for one month as we know as expiry appears premium will fall , or bcz of time decay / theta

caution it doesn't include any global , investors sentiment

- if you needed tp calculate for next day
or in other words
if you needed short strangle strikes for next day use this formula
- Vix /sqrt(365) = Y%
where 365 is number of days in one year
and nifty can go up +Y% or it may can go down by -Y%

by using above and below strikes we can do short strangle (short above strike CE and Short below strike PE)


i hope that it will help a lot , if you like it do follow for more