VIX Calculation Part 2 #optionstrading #crypto #investing

now we go to the option chain and get rid of all the out of the money options dependent on that strike price we found in the last video now we look at the bids for each option and if there's any zeros delete those as well move up and down each option chain and when you get to two consecutive zero bids don't do any more and delete the zero bids now for every single strike you need to find Delta K now we can use this formula to find the variance for every single option just make sure to use the right terms for each expiration dat when that's all said and done you should get some pretty small numbers that's okay we want that now that we have all this information we get take all the numbers we have and throw it into this equation and then multiply by 100 and then you got the vix this number is supposed to measure the expected volot for the sp500 over the next 30 days similar indexes exist for the NASDAQ and the Russell 2K as well as different individual stocks if you take these values these vix values and divide them by 16 that's supposed to give you the expected move per day for the next 30 days so if the vix is at 16 and you divide by 16 this means that over the next 30 days you can expect the index to move around 1%