India vix is an volatility index of an nifty 50 - India Vix shows the expected volatility for next one year 🛑 - currently india vixis at 15.62 (IST 12:02 PM) -market is raising but volatility is falling - sudden drop or rise will increases the volatility/vix otherwise Vix will be flat
🛑 what is 15.62means ? - well, it is expected volatility for next one from today it means nifty can go up by +15.62 % or it may can go down by - 15.62% (for next one year) - it doesn't include any global sentiment or news
-now we can calculate expected volatility for next one month and even we can calculate for next day also - Question is what is the use from it ? - well, it tells us that it may can stays in between mine range when market is choppy / range bound - and it will gives us shorting strikes to do the short strangle
-then if you needed range for next one month then , use this formula Vix /sqrt (12) = x% where - 12 is number of month ( standard vix is calculated for one year )
for ex, vix = 15.62 , sqrt(12) = 3.46 15.62/3.46 = 4.5 % means from today's market close to next one month nifty can go up by +4.5% or it may can go down by -4.5% . using this we can do short strangle for one month as we know as expiry appears premium will fall , or bcz of time decay / theta
caution it doesn't include any global , investors sentiment
- if you needed tp calculate for next day or in other words if you needed short strangle strikes for next day use this formula - Vix /sqrt(365) = Y% where 365 is number of days in one year and nifty can go up +Y% or it may can go down by -Y%
by using above and below strikes we can do short strangle (short above strike CE and Short below strike PE)
i hope that it will help a lot , if you like it do follow for more
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