VIX (fear index)
VIX · fear index · volatility index
The VIX measures the stock market's expected volatility over the next 30 days, calculated from S&P 500 option prices; it rises when investors are anxious, hence the nickname "fear index."
In plain terms
When markets get nervous, investors pay up for insurance against a fall, in the form of options. The VIX turns the price of that insurance into a number showing how much turbulence investors expect. It is calculated by Cboe Global Markets. As a rough guide, readings below 20 suggest calm and above 30 signal high fear.
Why it matters
The VIX usually moves opposite to stocks, so it offers a quick read on sentiment. A spike signals investors are rushing to avoid risk, while a very low reading for a long time is sometimes read as a warning of complacency.
How it connects to markets
- A VIX spike: stocks tend to fall, safe havens such as Treasuries, gold and the yen tend to rise, and emerging-market currencies weaken
- A falling VIX: risk appetite usually returns
- Other markets have their own versions, such as the VSTOXX for European stocks