The Chicago Board Options Exchange (Cboe) publishes a number of different Volatility indiceswhich help analysts and traders to determine the current expected range of fluctuation (implied volatility) of the respective underlying. The ECC measures the implied volatility of the euro and provides traders and options traders with important information. In this article you will learn what the EVZ is and what added value it offers.
What is the ECC?
The Cboe EuroCurrency Volatility Index (briefly: EVZ, due to the ticker symbol) measures the short-term fluctuation range (implied volatility) of the euro or the dollar-euro exchange rate expected by the market. The same method is used to calculate the VIX and the option prices of the CurrencyShares Euro Trust (FXE) are used to calculate the index.
CurrencyShares Euro Trust (FXE)
The CurrencyShares Euro Trust with the ticker symbol FXE is an ETF that was launched to track the Price of the euro in US dollars to map. The product is very liquid tradable, as well as the options on the FXE, which are used to calculate the ECC.
Interpretation and analysis of the ECC
The "Euro VIX", as the ECC likes to be called, forms the short-term Fluctuation range expected by the market for the price of the euro in U.S. dollars. An increase in the index indicates an increased range of fluctuation (volatility), while a decrease in the index indicates decreasing volatility.
In addition to traders speculating on rising or falling prices of the euro, the ECC analysis is also for Options trader meaningful, since the development of implied volatility plays an important role in the success of an options strategy.