What is the VIX Index?

VIX Index Definition. The VIX, or Volatility Index, is the ticker symbol for the Chicago Board Options Exchange Volatility Index. It is a popular measure and a weighted blend of implied volatiltiy for a range of options on the S&P 500 index. There are no assets backing this measure, although trading in the index is allowed. Since it is determined by measuring implied volatility, a future measure of market expectations for volatility, it is viewed as a leading forecasting tool for market behavior. A high value corresponds to a more volatile market, thereby reflecting higher costs for options. Historically, stocks average between 20 to 25 on the index, while the volatility for major currencies, based on a similar methodology, tends to fall between 10 and 15. The VIX is commonly referred to as the fear index, as it represents one measure of the market’s expectation of volatility over the next 30 day period. Professor Robert E. Whaley of Vanderbilt University introduced the VIX Index in 1993. A chart of recent values is presented below:

VIX Index

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