NSE launches volatility index futures

Written by Press Trust of India | Mumbai | Updated: Feb 27 2014, 09:26am hrs
To help investors hedge near-term volatility risks in their equity portfolio, the National Stock Exchange (NSE) on Wednesday launched its futures contracts on India VIX (volatility index) called NVIX. India VIX is a volatility index based on the index option prices of Nifty.

Volatility is a different risk class. It has a tremendous potential as every one has to deal with volatility. Anyone who has a portfolio, one who needs to hedge the portfolio for volatility... it could be for institutional or high net-worth individuals. It is a broad base usage of this product, NSE MD & CEO Chitra Ramkrishna said after the launch. The NSE, which constructed India VIX, started disseminating India VIX index in 2009. India VIX indicates the investors perception of the markets volatility in the near term.

The index depicts expected market volatility over the next 30 calendar days. A high India VIX value would suggest that the market expects significant increase in volatility, while a low value indicates the reverse.