VIX

VIX, the CBOE Volatility Index, is a real-time measure of the market’s expected volatility in the S&P 500 over the next 30 days. It is published by the Chicago Board Options Exchange (CBOE) and calculated from the prices of a broad range of near-term and next-term SPX options. The index represents the market’s expectation of annualized volatility, expressed as a percentage.

VIX is commonly called the fear gauge because it tends to rise when market stress increases and fall when conditions stabilize. Higher values indicate greater expected volatility; lower values suggest calmer conditions. It does not predict market direction, but it serves as a gauge of risk sentiment. In tranquil periods, VIX typically sits in the low to mid teens, while it has spiked to very high levels during crises—levels above 80 occurred during the 2008 financial crisis and again during the March 2020 market turmoil.

VIX itself is not directly investable, but futures and options on VIX are traded on CBOE. Several exchange-traded products seek to provide exposure to VIX or its futures. These instruments can be used for hedging or speculative purposes but involve complexities such as roll yield and the term structure of VIX futures, which can cause long-term returns to diverge from the level of the VIX.