The VIX Index is often referred to as the ‘fear index’ because its value tends to spike when there is a rush of concern about the immediate outlook for equity markets. So how effective is it as an early indicator of a direction change, and does it really offer anything in the way of predictive power with regards to the actual timing of the move and the price path of the underlying?
- Explain the benefits of employing volatility as a trading indicator
- Outline the basis of the VIX and how it is calculated
- Explain the difference between historical and implied volatility
- Explain how the price of options change in the face of shifting volatility expectations
- Describe why the price of put and call options are linked
- List the benefits of locally based volatility measures
- Outline the considerations that need to be made before buying or selling volatility
- Discuss why the price of volatility can rise so rapidly
- Explain the potential benefits of employing volatility derivatives within an equity portfolio
- Outline why some investment managers now consider volatility to be a separate asset class
Looking for a RG146 CPD solution? This course also forms part of our complete online CPD solution, , which enables financial participants and organisations to meet ASICs RG 146 ongoing training requirements.