What Is the Volatility Index? The Volatility In
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Posted On: 05/10/2017 12:17:51 PM
What Is the Volatility Index?
The Volatility Index trades under the ticker symbol VIX. That's why they call it the VIX. The VIX measures the premium, or price, of put options on the S&P 500 index. I know, I looked it up...
Now, a put option is a downside play on a stock or index. You buy a put option on, say, Apple, and if Apple falls in price, your put option will be worth more money. (Strategy advice: don't buy put options on Apple.)
Put options are often thought of like insurance. It works like this: Say you own $1 million of Apple stock (congratulations!). You could put down $10 grand and buy some put options.
The Volatility Index trades under the ticker symbol VIX. That's why they call it the VIX. The VIX measures the premium, or price, of put options on the S&P 500 index. I know, I looked it up...
Now, a put option is a downside play on a stock or index. You buy a put option on, say, Apple, and if Apple falls in price, your put option will be worth more money. (Strategy advice: don't buy put options on Apple.)
Put options are often thought of like insurance. It works like this: Say you own $1 million of Apple stock (congratulations!). You could put down $10 grand and buy some put options.
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