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What is ATM (AT The Money) Options?

ATM are those options having Strike near to Spot Price. Current Price and Underlying is near. Example : NIfty is trading at 16970 Put Option : 17100                    ITM 17000                    ATM 16900                    OTM ATM Option has Delta Value 0.50 why ??? Because Probability of Nifty going up or down from Current Price is 1/2 i.e. 50% Call Option : 17100                     OTM 17000                     ATM 16900                     ITM  For Option video : https://youtu.be/XbwnxRLp7L8 Exercise : Reliance : CMP 2200 Rs PUT Option : 1800 2100 2200 2500 Call Option : 2000 2100 2200 2400 You can Comment here for more updates and Query on any option related Topics.

FACTS OF VIX, BASIC USE, IMPORTANCE AND INDICATOR IN SIMPLE LANGUAGE.....


What is VIX India?

VIX is volatility index showing market momentum and market’s expectation of volatility over the near term. Volatility is often described as the “rate and magnitude of changes in prices" and in finance often referred to as risk. Volatility Index is a measure, of the amount by which an underlying Index is expected to fluctuate.

What is importance of VIX?

Generally VIX provide view for overall sentiment of market through which one can get idea of market and fear involved  in the market.

Basic of VIX.....

Higher the VIX higher will be fear or uncertainty

Lower the VIX index lower will be fear

So, one can get an idea of Money Flowness where VIX index is stable or higher or lower.

Can VIX is useful to make position in options?

It is very logical question, VIX is useful to me to create my option position. The answer is YES, by studying VIX we can ascertain the risk involved in stock market. In last 3 days as on 25 Feb the VIX was at high because of air strike done by Indian air force.

In a week period I.e. 1st March today VIX fall almost 20% from pick. So, market is showing some strength and almost every stock option fall drastically  due to fall in VIX. Take any name reliance volatility was 29 and during day it reach to 26, so VIX is common parameter to study overall market fear.

when VIX fall what will happen?

Basically, VIX is directly relating to premium of option. When VIX is at high time value of option will be high, when VIX fall time value will goes down fast. One can see depreciate of option price without fluctuations in underlying.

Is VIX tradable, can buy or short?

It's not stock, is index. So, one can't do trade directly. But in foreign VIX ETFs available where one can do trade.

Is Individual Stocks  Have Its Own VIX ?

Yes, Each and every stock has its base VIX depends on Movement expected in one year time Frame. Expected movement expected in one year is VIX number. Stock has Implied Volatility while VIX is Index of Volatility. Example: SBIN is having 32 Implied Volatility where as IBULL HOUSING has 55 Implied Volatility. In yes Bank Earlier there was 30 Implied Volatility but due huge fall its Volatility increase to 65.

When VIX goes up ?

When market turn negative with big uncertainty the price of put use to rise soon 200-300% in no time.

During election period VIX will be at pick, irrespective election result once outcome comes VIX tend to go down soon.

VIX always at pick when result of any underlying stock about to come, once result announces VIX use to go down.

In short when VIX at pick strangle of option will be at pick. Lower the VIX lower the straddle of index.

How VIX is calculated?
         
The VIX is calculated using a formula to derive expected volatility by averaging the weighted prices of out of the money puts and calls.

For complex calculation follow below link....









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