VIXY

Discussion in 'Trading' started by yank_my doodleitsadandy, May 11, 2022.

  1. I have never seen the VIX and the market go down at the same time. Kinda weird?
     
  2. NEVER?! It happens sometimes.

    Just like VIX can go up with significant upside volatility (ie VIX up, SPX up, surprising to some), it can also go down with insufficient downside volatility (ie VIX down, SPX down, surprising to some, including you, it seems). All four combinations can and DO happen: VIX up, SPX up; VIX up, SPX down; VIX down, SPX up; VIX down, SPX down - just not in equal proportions.

    Have a look at the formula for VIX. It includes both call and put options. If the calculation for volatility (ie VIX) as defined by the formula and based on options prices goes down (regardless of the direction on SPX) then VIX goes down.

    https://cdn.cboe.com/resources/vix/vixwhite.pdf

    PS: VIXY != VIX. I think you know that already, but notwithstanding what I wrote above, VIXY and VIX won't always go the same direction, although usually they will.
     
    Last edited: May 11, 2022
    KCalhoun likes this.
  3. SunTrader

    SunTrader

    OP said at the same time. Not never.
     
  4. Yes, I noticed that OP, VIX is down today even though market down bigly. It seems to me that means people playing the options game think the end of the downfall might be near, that's all I can figure...
     
  5. SunTrader

    SunTrader

    1 minute chart $SPX (black) $VIX (Blue) moving inversely as usual so no they both weren't going down at the same time:-
    ! SPX VIX.png
     
  6. He said "never at the same time."
     
  7. Nope, it happens 25% of the time which is fairly consistent across time, because the linear correlation coeffecient of vix and spx is about -0.76 last I read
     
    zghorner likes this.
  8. I guess I never noticed. Thanks.
     
  9. nitrene

    nitrene

    I've noticed in the last leg down VIX doesn't always go up when the SPX is coming down. I wish there were some retail ETNs based on the VXN since its really the Nasdaq that is the eye of the storm in this collapse.
     
  10. SunTrader

    SunTrader

    Close. :thumbsup: Today's reading on the close was -0.71:-
    ! SPX VIX correl.png
     
    Last edited: May 11, 2022
    #10     May 11, 2022
    stochastix likes this.