Definition. An index published by Cboe that measures the market's expected volatility of the S&P 500 over the next 30 days, calculated from option prices.
How it works
When investors buy more downside protection, option prices rise, and VIX with them. That's why it's called the “fear index”. It usually moves opposite to the stock market.
Example
In periods of panic VIX spikes, and the typical daily range in stock indices widens.
What to watch out for
VIX measures expectations, not the future. A high VIX doesn't mean the decline will continue.
You'll find the full explanation with graphics, examples and exercises in the 🖥️ Order flow atlas space, and its use in the live market in the 🔴 Live Room. Both are available to Club members (in Polish).
