Alright so maybe this is really minor in relation to the stuff we have to know, but nonetheless I want to understand!
On page 639 of book 1 CFAI it explains the CBOE volatility index (VIX)
It is stated that (1) "the VIX rises when market participants become fearful of an impending market decline"
Then it says (2) " when other indicators suggest that the market is oversold and the VIX is at an extreme high, this combination is considered bullish"
From statement (1), I understand that a high VIX indicates a bearish market because we are fearful of a DECLINE.
Why then in statement (2) it says that a high VIX points toward a bullish market???...
Could somebody clear this up for me por favor? Muchas gracias
On page 639 of book 1 CFAI it explains the CBOE volatility index (VIX)
It is stated that (1) "the VIX rises when market participants become fearful of an impending market decline"
Then it says (2) " when other indicators suggest that the market is oversold and the VIX is at an extreme high, this combination is considered bullish"
From statement (1), I understand that a high VIX indicates a bearish market because we are fearful of a DECLINE.
Why then in statement (2) it says that a high VIX points toward a bullish market???...
Could somebody clear this up for me por favor? Muchas gracias