Volatility Index

What is Volatility Index?

The VIX, or Volatility Index, is the amount that investors believe the stock market-the S&P 500, especially-is going to move over the course of a short period. It's often referred to as the "fear index" because it shows just how concerned or unsure investors are about the market.

Key Points About the VIX

How It's Calculated: The VIX is based on the prices of S&P 500 options. It leverages those prices to forecast the probable movement of the market in the upcoming 30 days as a snapshot of market risk and investor sentiment.

Market Sentiment: When investors see any high VIX, this generally means one thing-investors have been getting ready for bigger volatility for some time in fear of or due to uncertainty regarding something. Therefore, in contrast to VIX's high, on the contrary, low ones indicate an opposite effect.