The Volatility 75 Index is a financial instrument that measures the markets expectation of volatility in the next 30 days. It is a synthetic index that tracks the implied volatility of the S&P 500 index options. The VIX (Volatility Index), also known as the fear index, is one of the metrics that traders use to measure market fear, stress, and risks. The VIX is created by the Chicago Board Options Exchange (CBOE) and is a real-time indicator of measuring predicted price fluctuations in the SP500 index options. The VIX is calculated using the prices of options with different expiration dates, and the options with a shorter expiration date are more sensitive to changes in the market, and they are weighted more heavily in the VIX calculation. The VIX is then used as a benchmark to calculate the Volatility 75 Index, offering traders a glimpse into the overall market sentiment and volatility.
The Volatility 75 Index is often considered a risky and unstable market, and a reading above 20 means that the market is fearful, which brings higher volatility. Trading the Volatility 75 Index offers numerous benefits for forex traders. Firstly, it provides a reliable measure of market volatility, allowing traders to gauge potential risks and adjust their strategies accordingly. Moreover, the Volatility 75 Index often experiences significant price movements, presenting traders with ample opportunities for profit. By incorporating this index into their trading strategies, traders can diversify their portfolios and enhance their chances of success.
