Is CBOE VIX Index indicating something?

FEAR INDEX

The CBOE VIX Index, of late, has crossed the 30 level mark. Is this indicating something?

In general, VIX values greater than 30 are linked to large expected volatility resulting from increased uncertainty, risk and investor’s fear. VIX values below 20 correspond to stable and stress-free periods in the market.

VIX vs S&P 500 in the last 1 year

One should not interpret that they move in opposite directions. There is more to it.

About VIX

Volatility measures the frequency and magnitude of price movements, both up and down, that a financial instrument experiences over a certain period of time. The more dramatic the price swings in that instrument, the higher the level of volatility. Volatility can be measured using actual historical price changes (realized volatility) or it can be a measure of expected future volatility that is implied by option prices (implied volatility).

The VIX Index is a measure of expected future volatility.

The VIX Index is created by CBOE (Chicago Board Options Exchange). It is the first benchmark index to measure market expectations of future volatility.

The VIX is based on options on the S&P 500 Index.

It is widely tracked all over the world and is referred to by other names such as Fear Index and Fear Gauge.

We will cover more on VIX, including on its use and examples of how to trade it, in a separate article in future.