The VDAX volatility index (actually VDAX-NEW to differentiate it from the previous version) is an indication of the expected volatility (i.e. range) of the DAX stock index for the next thirty days. The VDAX is provided by Deutsche Boerse in Germany, and is calculated using the DAX options that are traded on the Eurex electronic trading system. The VDAX is calculated once per minute from 8:50 AM until 5:30 PM Central European Time. The symbols for the VDAX volatility index are VDAX (for the previous version), and either VDAX-NEW or V1X for the current version.
VDAX and Implied Volatility
The VDAX volatility index indicates the implied volatility (i.e. the expected range) of the DAX stock index for the next thirty days as a percentage of the current DAX stock index price. For example, a DAX stock index price of 4,000 and a VDAX of 10 would indicate that the DAX stock index is expected to fluctuate between 4,400 and 3,600 over the next thirty days.
Trading the VDAX
The VDAX volatility index is used by options traders to calculate options premiums (i.e. options prices), and also by DAX traders to determine the expected daily range for the DAX stock index and futures market. The VDAX is also a tradeable market in its own right, by way of its futures market, which is traded on the Eurex electronic exchange from 8:50 AM to 5:30 PM Central European Time.
