Definition
An index of how much movement options traders expect in the S&P 500 over the near term. Often called the market's "fear gauge."
The story
When investors get nervous, they pay more for options to protect themselves, and the VIX (Cboe Volatility Index) rises. A calm market keeps it low. It doesn't predict which way stocks will go, only how bumpy traders expect the ride to be.
Why markets watch it
It tends to jump when stocks fall sharply.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms