Volatility Indexes: Euro Currencies EVZ (Part Of A Series)

In other articles in this series, you have seen how well the Volatility Indexes work on a wide variety of markets. If you need to review those articles, click on the article below.
Volatility Indexes: Introduction To A Series
Volatility Indexes: Oil OVX (Part Of A Series)

In the following two-minute video, Darrell Martin explains the CBOE EuroCurrency Volatility Index, also known as “Euro VIX”, Ticker- EVZ. Martin demonstrates using EVZ when trading FXE, which is an exchange-traded fund (ETF) that corresponds with the EVZ. FXE is based on options on the CurrencyShares Euro Trust.

In this video, you can see that when charts are compared, it is easy to see the correlation between the implied volatility and the market of the instrument you are watching. When the market goes up, implied volatility goes down. When the market goes down, implied volatility goes up. The video shows that as the CurrencyShares Euro Trust declined over the last six months, implied volatility went up and up. The trust is starting to regain some in the market, so implied volatility is leveling off slightly.

What does this mean to you? Being able to use any of the Volatility Indexes as you trade gives you another tool in your arsenal which can help you manage risk, diversify your portfolio and leverage volatility. To connect with a positively charged group of Traders Helping Traders and further your trading education, go to www.apexinvesting.com, a service of Darrell Martin.