The India VIX, which measures the expected volatility for the next 30 days in the Nifty50, experienced a sharp decline today, dropping by approximately 6 percent and falling below 10.

Traders are puzzled by this trend because markets globally are under pressure and Indian shares too have fallen of late. A rising VIX indicates that market participants are expecting volatility to increase in the days ahead whereas a low VIX means traders expect less volatility. In a world marked by escalating geopolitical tensions, rising bond yields, and increasing crude oil prices, risk-on sentiments have been dampened globally. Despite these elevated risks, the VIX, which is displaying levels below 10, suggests that the markets are not perceiving these risks as significant. A low VIX spells bad news for option writers. That is because the premium on options is lower if traders expect the market to be less volatile.