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India Vix on Strategy Builder and Simulator

We are excited to introduce the newly integrated India VIX (Volatility Index) data within the AlgoTest Strategy Builder and Simulator tools.

India VIX, often referred to as the "fear gauge," measures market volatility and investor sentiment in the Indian stock market. By incorporating this critical index, traders and analysts can now enhance their strategies with volatility insights, allowing for more informed decision-making, risk management, and scenario testing.

You don't need to go to Tradingview or your broker to check India VIX

What is India VIX? What does it have to do with market volatility?​

India VIX' full form stands for India Volatility Index.

The India VIX is a volatility index calculated by the NSE from the order book of NIFTY options. The best bid-ask quotes of near and next-month NIFTY options contracts traded on the NSE's F&O segment are used for this. India VIX reflects investors' perceptions of market volatility in the near term, i.e. it portrays market volatility over the next 30 calendar days. The higher the India VIX number, the greater the predicted volatility, and vice versa. For instance, the current India VIX is 13.56 it indicates the market can be volatile within the same range either side, over the next 30 calendar days.

Checking India Vix on AlgoTest​

Check India VIX On the Strategy Builder​

Step 1​

  • Login to AlgoTest.in and click on the Strategy Builder button as shown in the image below.

Step 2​

Click on the Option Chain bar to go to Option Chain.

Step 3​

Now you can see the India VIX above the Option Chain as highlighted in the below image, you can analyse it and make your decisions accordingly.

On the Simulator​

Step 1​

  • Login to AlgoTest.in and click on the Simulator button as shown in the image below.

  • Or you can directly visit our simulator page by visiting the AlgoTest Simulator

Step 2​

Here you can see the India VIX above the option chain, you can also see the change in the current day

Step 3​

You can also check and analyse VIX past data by changing the date and time in the simulator using various timeframes. Additionally, you have the option to enable autoplay, allowing you to set a specific duration per second to control the playback speed.

What does India VIX measure?​

India VIX, also known as the India Volatility Index, measures the expected volatility in the Indian stock market over the next 30 days. It is derived from the prices of Nifty 50 index options and reflects the market's expectations of near-term volatility.

Explanation​

  • India VIX represents the market's anticipation of future market movements, particularly uncertainty. A higher VIX indicates that market participants expect larger price swings (higher volatility), while a lower VIX suggests more stable market conditions.

  • It is often referred to as the "fear gauge," as higher values can signal increased fear or uncertainty among investors.

How India VIX is used in the stock market​

  1. Sentiment Indicator: Traders use India VIX as a gauge of market sentiment. High VIX levels may signal a turbulent or bearish market, while low VIX levels suggest stability or bullishness.

  2. Volatility-based Strategies: Many traders create strategies based on the VIX levels. For example, during high volatility (high VIX), options sellers may demand higher premiums for writing options, while during low volatility (low VIX), premiums are lower.

  3. Hedging: A rising VIX often correlates with falling stock prices. Traders may use it to hedge positions in anticipation of market drops, by buying put options or other instruments that benefit from increased volatility.

  4. Timing the Market: Some investors might time their entry and exit in the stock market based on VIX trends. A very high VIX might be seen as a sign of panic selling, offering a buying opportunity, while a low VIX might indicate complacency and a potential correction.

Understanding the India VIX allows traders to better assess risk and potential opportunities in the market.