VIX (Volatility Index)
The VIX is the Cboe Volatility Index, which measures the market's expectation of S&P 500 volatility over the next 30 days based on index option prices.
Calculated by Cboe Global Markets from the prices of a wide range of S&P 500 options, the VIX is expressed as an annualized percentage. It is often called the fear gauge because it tends to rise sharply when stocks fall and investors rush to buy protection.
The VIX usually moves opposite to the stock market. Calm, rising markets bring low readings, while sell-offs and crises bring spikes. Historically, the index has often spent long periods roughly in the teens and twenties, with occasional extreme spikes during events such as the 2008 financial crisis and the March 2020 pandemic crash.
A rough interpretation: dividing the VIX by about 3.5 (the square root of 12) gives the expected one-standard-deviation move for the S&P 500 over the next month. A VIX of 21 implies roughly a 6% monthly move in either direction.
You cannot buy the VIX directly. Investors use VIX futures, options and related ETFs, which behave very differently from the index itself and can lose value quickly over time.