INTRODUCTION TO VIX CFD TRADING

this post was originally published By HexaTra.com

INTRODUCTION TO VIX CFD TRADING

VIX CFD Trading The Chicago Board of Options Exchange Volatility Index (VIX) is an index that measures the implied volatility of S&P 500 index options. The VIX measures volatility in real-time in the stock market, particularly the S&P 500, Worlds’s benchmark stock market index, which follows the price of the 500 biggest listed companies in the US. It is calculated using the S&P 500 index options on the CBOE. The VIX, seldom nicked to as the ‘fear index, is a gauge of the expected volatility of stock market S&P 500 over the next 30 days. A high index level would imply more market volatility based on the higher price of options. The VIX is not the S&P 500 index; it is most useful to consider it merely as the anxiety market level. It is also essential to note that the Volatility Index is an indicator of volatility on the upside and the downside.

CFD providers have enabled a CFD contract on the Volatility Index Futures that trade on the CBOE. This CFD allows traders to with the experience of whether investors expect equity markets to continue confidently in the next 30 days or if any known or unknown crisis is anticipated to trigger a sell-off or rally.

Remember, volatility does not predict the future direction, and the VIX index can go up if the S&P 500 is appreciating or decreasing at a fast velocity. That stated, as the many cases, traders generally see the VIX index rise higher in times of uncertainty and the S&P 500 index drawdown, which is the reason it is known as the ‘fear index’.

Furthermore, CFD brokers, while having an excellent average spread already, has an additional sweetener for extensive-scale investors. It has a “big trader rebate scheme” with its private improved trading platform.

The characteristics of VXX makes it a prominent hedge for equity positions; however, its price overshoots also open up money-spinning possibilities for short-term traders who are chasing the profit motive. Besides, trading the VXX as a CFD further decreases market exposure and dramatically improves the earnings potential due to leveraged trading availability.

 

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