STOXX Research, Commented By Jan-Carl Plagge, Head Of Applied Research, STOXX Ltd.: Eurozone Volatility Touches Historical Lows

European markets have seen relief in April especially since Emmanuel Macron won the first round of the French presidential election, thereby reducing the risk of a result which could have shocked markets. Consequently, the volatility index VSTOXX reached historical lows leading to a further increased interest in volatility as an asset class among investors. The VSTOXX index tracks the implied volatility based on real-time options prices for the EURO STOXX 50, thus reflecting market expectations of future volatility. As markets fall or rise, volatility tends to move in the opposite direction. With VSTOXX futures and options, investors and traders have a volatility product that is representative of the whole Eurozone market, as opposed to single-stock options. These options can help to hedge their equity portfolios in times of uncertainty.