Short Update on India VIX and Open Interest

Indian VIX

India VIX is a volatility index based on the NIFTY Index Option prices. From the best bid-ask prices of NIFTY Options contracts, a volatility figure (%) is calculated which indicates the expected market volatility over the next 30 calendar days

Volatility Index measures market’s expectation of volatility over the near term. Volatility here refers to rate of changes in prices or risk. It is denoted in percentage and higher the VIX, higher is the volatility.

 
The index does not tell about the price movement but the risk associates with the stocks. Normally is a range bound or mild upside market, VIX is low while in case of selling pressure, value of VIX rises. If value of India VIX is below 20 then market is perceived as slowly trending/sideways with less amount of fear and above 30, then market is perceived fragile and above 40, market is uncertain while above 50, market is dangerous.

During the entire month of august and September(till date) India VIX value remains below 18 signifying that there are high chances of continuation of compressed/sideways market.

So Whomever trying to trade with trend trading strategies like supertrend be cautious of sideways markets. Chances of continious losses could be more in coming days and also take iTrend ribbons as a guidance to judge overall trend to avoid sideways markets

Nifty Options Open Interest Data

Currently 5200PE and 5400PE holds the higher open interest indicating that PE writers are dominating the market and very much confident of holding 5300 for the
current options series.