The volatility index VDAX-NEW®, which was developed by Deutsche Börse and Goldman Sachs, tracks the degree of fluctuation expected by the derivatives market – i.e. the implied volatility – for the DAX index. The index expresses in percentage terms what degree of volatility is to be expected for the following 30 days.

Since volatility is negatively correlated with the price development of a market, it is suitable for diversifying portfolios: as prices in DAX are slumping, the price of the VDAX-NEW is advancing.

The calculation of this index is based on DAX option contracts, which are quoted both “at the money“ and “out of the money“. Thus, VDAX-NEW has a broader volatility surface than VDAX®, which only takes into account options that are “at the money”. VDAX-NEW will supersede VDAX in the medium-term.