CBOE Volatility Index: A Guide for Investors
What is the CBOE Volatility Index (VIX)?
The CBOE Volatility Index (VIX) is a popular measure of the implied market volatility of S&P 500 index options. It is calculated by the Chicago Board Options Exchange (CBOE) and is often referred to as the "fear gauge" because it reflects investors' expectations of future market volatility.
How is the VIX calculated?
The VIX is calculated using a formula that takes into account the prices of S&P 500 index options with different expiration dates. The formula is designed to measure the implied volatility of the S&P 500 index over the next 30 days.
What does the VIX tell us?
The VIX can be used to gauge investor sentiment and market volatility. A high VIX reading indicates that investors are expecting high levels of volatility in the future, while a low VIX reading indicates that investors are expecting low levels of volatility.
How can I use the VIX in my investing?
The VIX can be used by investors to make informed trading and investment decisions. For example, investors who are concerned about market volatility may want to consider buying VIX futures or options contracts to hedge against potential losses. Conversely, investors who believe that volatility is overstated may want to consider selling VIX futures or options contracts to profit from a decline in volatility.
Where can I find more information about the VIX?
There are a number of resources available online where you can find more information about the VIX. Some popular resources include:
- CBOE Volatility Index (VIX)
- CBOE Volatility Index index overview
- Investopedia: CBOE Volatility Index (VIX)
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