Shaun Richards from Not A Yes Man Economics and Mike Ingram, Strategist at BGC Partners, discussed how the VIX index works and how traders could trade the volatility via options.
Option traders keep an eye on Implied Volatility (IV) as rising IV adds to the option price and vice versa. Ingram and Richards dive deep into the options pricing model and discuss the concept of Implied Volatility and Historical Volatility.
Currently, VIX is very low ...to the point where experts say markets are complacent about near term risks. Though not a perfect indicator, option traders keep an eye on Implied Volatility (IV) as rising IV adds to the option price and vice versa. Moreover, VIX trading is simply putting a price to the volatility or uncertainty.
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Editors’ Picks
EUR/USD trims losses, back to 1.1830
EUR/USD manages to regain some composure, leaving behind part of the earlier losses and reclaim the 1.1830 region on Tuesday. In the meantime, the US Dollar’s upside impulse loses some momentum while investors remain cautious ahead of upcoming US data releases, including the FOMC Minutes.
GBP/USD looks weaker near 1.3500
GBP/USD adds to Monday’s pessimism and puts the 1.3500 support to the test on Tuesday. Cable’s marked pullback comes in response to extra gains in the Greenback while disappointing UK jobs data also collaborate with the offered bias around the British Pound.
USD/JPY is looking for direction around 153.00 with key US data in focus
USD/JPY reversal from 153.70 has been contained above 152.70 on Tuesday. Major currencies are trading within narrow ranges amid thin trading volumes. Investors await the release of the US GDP and PCE Inflation figures to make decisions.
Editors’ Picks
EUR/USD trims losses, back to 1.1830
EUR/USD manages to regain some composure, leaving behind part of the earlier losses and reclaim the 1.1830 region on Tuesday. In the meantime, the US Dollar’s upside impulse loses some momentum while investors remain cautious ahead of upcoming US data releases, including the FOMC Minutes.
GBP/USD looks weaker near 1.3500
GBP/USD adds to Monday’s pessimism and puts the 1.3500 support to the test on Tuesday. Cable’s marked pullback comes in response to extra gains in the Greenback while disappointing UK jobs data also collaborate with the offered bias around the British Pound.
Gold loses further momentum, approaches $4,800
Gold recedes to fresh two-week troughs around the $4,800 region per troy ounce on Tuesday. The precious metal builds on Monday’s downtick following a marked rebound in the US Dollar and mixed US Treasury yields across the board.
Crypto Today: Bitcoin, Ethereum, XRP upside looks limited amid deteriorating retail demand
The cryptocurrency market extends weakness with major coins including Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) trading in sideways price action at the time of writing on Tuesday.
UK jobs market weakens, bolstering rate cut hopes
In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.
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