Betting on our VIX (Volatility) Index offers the opportunity to profit from erratic trading patterns, such as we’ve seen throughout world stock markets over recent weeks. This means you can take a view on the extent of market volatility rather than the direction of particular market moves.
The VIX is the shortened name for the Chicago Board Options Exchange Volatility Index and is based on the expected price volatility of options on the S&P 500 index. Also known as the ‘fear index’, the VIX provides a handy measure of market instability.
As shown on the chart, the recent increase in the VIX beginning in July and peaking in August has run parallel to the sell-off in the world’s equity markets, specifically stocks in the S&P 500. The key question for VIX traders is whether the worst is over yet. If you believe there will be even greater instability in the short-term you could buy the VIX, or if you think we are in for a lull you might choose to sell.
With IG Index you can gain exposure to markets, such as the VIX, that would not otherwise be readily accessible to non-professional investors.
We offer the VIX at a 0.1-point bid-offer spread, in addition to any market spread. The minimum bet size is £50 per index point, and all bets settle against the relevant VIX futures contract on the CBOE. For full details please see our Dealing Handbook
Updated: 04/09/07
The above comments do not constitute investment advice and IG Index accepts no responsibility for any use that may be made of them.