VIX volatility index “fear index”. How to use it in options trading?Definition of the VIX IndexThe volatility index with the VIX ticker or, as traders call it, the fear index. This index belongs to a group of indices that measure market volatility. Calculation of this index is carried out by CBOE – Chicago Options Exchange. The basis for calculating this is the change in the prices of CBOE options. Naturally, we are talking about call and put options. The exchange calculates this index in real time. This index shows how the annual value of the S&P 500 index volatility options will change over a 30-day period. VIX index is measured in percentage points. The confidence level of this index is 68%.What is the role of the VIX Index for option traders?If we take a closer look at the output of this index, we will see that it takes the market prices of options whose expiration expires more than 23 days and less than 37 days. Also, risk-free U.S. Treasury bonds and interest rates on bills are accepted. The very value of the VIX index for traders of binary options and other types of options is that they can get relatively accurate data for a short period of time. Having carefully studied the data, you can find out how you need to act. In other words, after 30 days, you can find out how to change the annual volatility of the S&P 500 index with an accuracy of 68%. Very cool thing! To simplify, this index reduces the risk of losing your assets when trading options when used properly. Below are examples:– With an increase in the number of investors who fear a fall in markets, premiums on put options increase, while on call options decrease.– If investors are confident in the growth of markets, premiums on call options will increase, and on put options will decrease.– If there is no confidence in market participants in the market participants, then investors will look towards insurance and reducing the risks of losing their assets. In this case, the call and put premiums of the options will rise. This index can be used in two directions. With his data, your hedge can be even more effective. Or you can make a number of successful transactions that will bring you profit. Reflecting the expectations of investors with this index can also serve as a good signal for you to buy assets for the long term. How to apply VIX Index to traders in analyzing market conditionsThere are many ways to use the VIX Index for traders. Both trading strategies and entire trading systems are based on this index. The VIX index has a scale for measuring the “fear” of investors from 0 to 100. Most often, the VIX index values range from 15 to 40. For example, take an average value of 30 points. Consider 2 cases and what they will reflect by themselves. If the value of the VIX index is below 30 (20), then it is generally accepted that investor concerns are at a fairly low level. If the value of the fear index fluctuates in a narrow range (15-20), then we can clearly see the prerequisites for a growing trend in the medium or long term. If the index is greater than 30, this indicates an increase in investor concerns. Naturally, in order to protect themselves from price fluctuations, they will buy in smaller volumes, or completely refuse to buy options with a further increase in the index. This is typical behavior for insuring your assets against price fluctuations and a possible market fall. It should be understood that the index cannot be considered as an indicator of market entry into a downtrend. Everyone knows about the period from October 2008 to March 2009, when the index showed over-growth, and US indices continued to fall.ConclusionThe VIX index is still an excellent tool for analyzing market conditions. It makes a good understanding of the level of correlation of what traders are willing to trade: at the risk or premium. In order to get accurate data using this index, see its value when it fluctuates in a relatively narrow range. Using this index, you can better understand the behaviour of traders in the market, as well as see what manifestations the actions of the latter lead to.TRADE OPTIONS“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.” Related ContentCity Index - British Trading Platform 19.10.2018An options trading strategy on TMA and RSI 20.03.2018The direction of the market movement. 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