CBOE Nasdaq Volatility Index (VXN)
Contents
Demystifying the CBOE Nasdaq Volatility Index (VXN)
Understanding the CBOE Nasdaq Volatility Index (VXN)
The CBOE Nasdaq Volatility Index (VXN) serves as a crucial indicator of market expectations regarding the volatility of the Nasdaq 100 index over the next 30 days. Launched by the Chicago Board Options Exchange (CBOE) in 2001, VXN provides valuable insights into market sentiment and nervousness within the technology sector.
Decoding the Significance of VXN
As a real-time market index, VXN reflects investors' perceptions of volatility specifically within the Nasdaq 100 index. This index was developed as a counterpart to the VIX, which measures volatility in the S&P 500. Given the unique characteristics of the technology-heavy Nasdaq, VXN offers a tailored perspective on market fluctuations and risk perceptions within the tech sector.
Exploring VXN Methodology and Trends
The methodology used to calculate VXN mirrors that of the VIX, incorporating near-term put and call options on the Nasdaq 100 index. Movements in VXN signify shifts in implied volatility derived from option prices, with increases indicating heightened uncertainty and decreases suggesting a more stable market environment. VXN trends are closely monitored alongside the Nasdaq 100 index to gauge market volatility and sentiment.
Facts:
- The highest level reached by VXN was 91.79 in September 2001, following the 9/11 terrorist attacks. (Source: Investopedia)
- Notable VXN peaks include 86.52 in October 2008 during the global financial crisis and 84.67 in March 2020 amid the COVID-19 pandemic. (Source: CBOE)
- VXN's lowest level was 9.75 in March 2017. (Source: Wikipedia)