Financial Insight

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About Us

Financial Insight is started keeping in mind our new generation of investors as well as fulfilling the needs of current investors. Today's capital and investment markets are changing and updating at a tremendous pace. Also with continuously increasing usage of technology, business and finance are growing and helping create wealth for their investors and shareholders. In this technology dominant world, most of the information is available to institutional investors and its getting difficult for retail investors to keep update with these excessive pool of information.

Technology is also helping create a new field known as financial engineering that build up new advance financial products like CDOs, Swaps, Volatility products. These products and its impact is usually unknown to retail investors around the world. As we have seen in 2008 with the mortgage based securities and how it produced ripple effects across the world which led to a global financial crisis, the real world consequences of these new financial products is unclear. In coming years, we believe financial engineering will keep evolving and we will see more financial products. So it is utmost important for new as well as experienced investors to keep abreast with developments in global capital and financial market.

Our team at Financial Insight work hard to gather, organize and simplify complex data from global capital markets to let our readers/investors to make better financial decision*. With our range of content on investing, global markets, business, economics and personal finance, we hope to meet our wide audience requirements. Readers can also suggest any topic to us and we will do our best to publish it.

*DISCLAIMER: All contents are owner/author(s) own opinion and thoughts and it’s only for informational purpose. Readers are advised to use their own discretion and also consult with their financial advisors before making any investments. This website should not be taken as a substitute to brokers or legal financial advisors. Financial Insight bear no liability whatsoever in case of damages or losses arising from the contents published here.

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Our Mission

"Long ago, Ben Graham taught me that ‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down" - Warren Buffett

At Financial Insight , we aim to provide valuable and timely information on business, finance, investment and global markets to help our readers and investors around the world to fulfill what Warren Buffett mentioned "buy quality merchandise". We believe this will help them achieve desired return on their investment*.

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How volatility index funds can cause market crash?

Chicago board options exchange or CBOE in short introduced VIX In 1993 to track expected market volatility based on options on S&P 500 index. VIX stands for volatility index. Menacham Brenner and Dan Galai introduced formulation for VIX and other related financial instruments in their 1986 academic paper.

As of now, there are many exchange traded products (ETPs) which track VIX performance. This give investors around the world to trade (both long and short) market volatility same as with stocks. Long positions are used to profit when expected volatility is about to increase and stock prices are falling. This give investors a hedge against stock portfolio which track market index. Same way short positions can be initiated when market volatility is at its peak. Markets have also produced an inverse VIX product known as XIV. This let investors bet on the future volatility movements.

Currently VIX ETP amounts to approx $3.5bn. The largest 5 products being VXX, XIV, SVXY, Proshares ultra VIX, Short term Futures ETF and VelocityShares daily 2x short-term ETN [1].

[1]Source: VIX ETPs: A crowded Trade? by Stuart Barton Published on Aug 28,2017, SeekingAlpha.

VIX products are not supposed to move the broad markets. But due to growing retail investment in VIX products, this dynamics have changed. Investors who believe equity market volatility to remain low will short the VXX and long XIV. But issuers will try do the opposite. Issuers will also short S&P options market as a hedge against their VIX position. Now this will create interesting dynamics and have the potential to move S&P markets considerably. We believe large investors/issuers having these positions/strategies on both can greatly move those markets.

VIX products are supposed to be for hedging purpose but with time and increasing popularity among investors, it is now being widely used for short/long positions. With these derivative products being traded for extensively, markets may see more volatility in coming months. We suggest our readers to stay focused on quality stocks and also look for movements in stock futures and options markets.