Spike in Volatility

The Volatility Indicator or VIX spikes up whenever there is fear or uncertainty in the market. See the chart below.

It spiked up sharply when Corona started. Since then it cooled down a lot to 25 odd levels. However in the last week it has again spiked up to cross above 30. This could be due to the uncertainty around the elections or also due to some fear of the 2nd wave of Corona. Whatever be the reason VIX being high means a lot of volatility. There will be moves in both directions. Expect Indian markets to mirror the moves of the US market so we can see gap ups/downs at opening. It is not very easy to trade in a high VIX environment so stay hedged or keep positions light!

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