VIX Futures Contracts
Essential Information for Traders' Analytical Success
When developing a solid plan, it is important for any trader or investor to obtain accurate information. To be more precise, this refers to the COT data from the COT Report for VIX Index Futures (Volatility Futures / Futures on VIX). The latest data is released soon after the market closes on Friday evening and the most recent COT Report becomes available.
In practice, getting started with researching the necessary information is quite simple. Here are the steps you should take:
- Select the desired market from the table;
- Analyze the COT data provided;
- Evaluate the current market sentiment and ongoing trends;
You can also access data for cryptocurrencies like Bitcoin. For a detailed explanation of this topic, visit the “High-frequency anchor of Bitcoin” page.
The charts provided (historical VIX Futures Data) show data for the past 6 months. However, you can access much more information by simply logging into your account or creating a free one if you are not registered yet to learn more about the basics of trading.
Should you encounter any issues with logging in or registering, feel free to contact us via email.
VIX Futures Chart Terms Explained
Weekly chart – A chart that displays data on a weekly basis, showing price movements over a week.
Prices – The value or cost of VIX Futures at any given time.
Net Positions – The total number of long positions minus short positions held by traders in the VIX Futures market.
OI – The total number of outstanding contracts (both long and short) that have not been settled or closed.
The data in the above charts explain how the market behaves over a specific period of time. The information on prices, COT index, net positions, and open interest (OI) are well correlated, providing a clear overall picture. Charts like these can also be used for analyzing forex trading, as shown in the example of the “High-frequency anchor of Dollar”.
How to Trade VIX Futures / How to Buy VIX Futures
The VIX (Volatility Index) is one of the most important tools for traders and investors to be employed. It assists in analyzing price fluctuations and forecasting stock, options, and other trading asset price levels. This index measures market volatility and serves as a "barometer" for investor sentiment.
From the VIX, one can infer whether the market is calm or if traders are panicking about future price movements. VIX trading is primarily done through the purchase of Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs) that are linked to the VIX itself.
Market participants have long faced the challenge of assessing the level of volatility, as it is a key indicator of risk at any given time.
Low volatility makes the market more predictable, which raises the price of financial instruments. VIX values above 30 are considered a sign of increased volatility, i.e., greater uncertainty, higher risks, and investor fear. On the other hand, VIX values below 20 typically suggest more stable market conditions. Nevertheless, it is important to note that this trend is not absolute.
The greater the fears of market participants, the more they are willing to pay for protection (insurance), which drives the index value higher. On the contrary, when the market is calm and the direction of price movement is clear, the VIX value is low. The value of the Fear Index usually depends on the following factors:
- Market participants' expectations, shaped by various factors;
- Release of important news;
- Trend reversals;
- Potential and ongoing crises.
The VIX is an important tool for assessing market sentiment and volatility, and knowing how it works can greatly improve your financial strategy (VIX Futures Trading Strategy), no matter who you are – a trader hoping to profit from volatility or an investor trying to hedge the portfolio.
As an illustrative example, the VIX can also be used in forex trading, such as with the Euro – High-frequency anchor of Euro. It is important to note that the VIX is not used for analysis only. For a better profit, speculators purchase exchange-traded funds as well as futures and options on the volatility index. Keep up with this index and understand the complicated nature of the financial markets.
