Cboe Launches 1-Day Volatility Measure05.25.2023
Market participants have long sought ways to continue to better understand and manage volatility in the financial markets. While various tools and indicators exist, many are lagging indicators that provide information about volatility after the fact. In response to this need, Cboe Labs, Cboe Global Markets’ innovation hub, has introduced the VIX1D Index. This groundbreaking volatility measure allows traders to estimate the current day’s volatility, providing real-time insights into market dynamics.
Cboe Global Markets, a leading provider of financial market solutions, has a rich history of innovation in the volatility space. With the launch of the VIX1D Index, the company reaffirms its commitment to meeting the evolving needs of market participants. This new index complements Cboe’s existing suite of volatility indices, including the renowned VIX Index. It offers a unique perspective on single trading day volatility, filling a crucial gap in the market’s understanding of real-time market dynamics.
The VIX1D Index, designed to measure the expected volatility of the S&P 500 Index over the current trading day, employs a similar methodology to its well-established counterpart the VIX Index. However, the VIX1D Index focuses on the compressed measurement of volatility over a single day, accounting for the short-term impact of news events on the market. As a result, the VIX1D Index tends to exhibit greater volatility than indices measuring longer time horizons. It gives traders valuable insights into daily market dynamics, reflecting short-term impacts and complementing the VIX Index’s 30-day outlook.
The launch of the VIX1D Index offers significant benefits for market participants seeking to better understand and navigate current equity market volatility. Traders employing same-day options trading strategies can leverage this real-time volatility measure to make informed decisions based on daily market dynamics. With the VIX1D Index, Cboe continues to drive innovation and provide essential tools for risk management and trading strategies, further solidifying its position as a leader in the volatility space.
The introduction of the VIX1D Index by Cboe Labs represents a significant advancement in volatility measurement and analysis. By offering a real-time estimate of the current day’s volatility, this index fills a critical gap in the market, empowering traders with timely insights into market dynamics. Cboe’s commitment to innovation and its partnership with S&P Dow Jones Indices have once again resulted in a cutting-edge solution that addresses the evolving needs of market participants.
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