VIX
The 30-day volatility expected on the S&P 500, read from option prices: the “fear gauge”.
The fear gauge
The VIX, computed by Cboe, measures the volatility the market expects on the S&P 500 over the next 30 days, from option prices. Below 15 the market is calm; 20 to 30, nervous; above 30, in crisis. Its long-run average is around 19 to 20.
How to read it
A VIX of 16 means the market expects 16% annualised moves, about 16 / √12 ≈ 4.6% over a month. The VIX almost always rises when stocks fall: it serves as a hedge and a stress signal.
VIX peaks
The VIX closed at 80.9 on 20 November 2008 after the Lehman Brothers collapse, then at 82.7 on 16 March 2020, its closing record, at the start of the pandemic. On 5 February 2018 it more than doubled in a single session.
Common mistakes
- Holding “long VIX” products: they lose value over time in calm periods.
Notitia newsroom · education, not investment advice.