VIX (Volatility Index)

Category: business

A real-time market index that represents the market’s expectation of 30-day forward-looking volatility.

Often called the "Fear Gauge," the VIX tracks the implied volatility of S&P 500 index options. When the VIX spikes, it indicates that investors are anticipating significant market turbulence or are actively hedging against a potential crash, often serving as a contrarian indicator for market bottoms.

Common Examples

• A VIX reading above 30 typically signals extreme market fear, whereas readings under 15 suggest a period of complacent, steady growth.
• The portfolio hedging strategy automatically increases cash allocation when the VIX breaks its historical mean-reversion boundary.