What is the VIX and what does it tell you?

Short answer

The VIX is a number derived from S&P 500 option prices that shows how much volatility traders expect over the next 30 days. It tends to rise when stocks fall and fear grows, and drift lower in calm, rising markets — which is why it is called the fear index.

Unusual options activity, live

As of Oct 16, 7:49 PM ET

Source · Rebel Intelligence. A large order can be a hedge, not a bet.

Reading the level

Low teens: calm, complacent conditions.
Around 20: normal uncertainty.
Above 30: stress; options are expensive and daily swings are large.

Rule of thumb

Divide the VIX by about 16 to estimate the expected daily move in the S&P 500. A VIX of 16 implies roughly a 1% typical daily range.

Limits

You cannot buy the VIX directly; futures and ETFs that track it behave differently and decay over time.
A high VIX says moves are expected, not their direction.

Common questions

Is a high VIX bearish?

It usually coincides with selling, but extreme spikes have often come near short-term lows. It is not a timing signal on its own.

How is the VIX calculated?

Cboe uses a weighted set of SPX option prices across strikes for the next roughly 30 days.

Why do VIX ETFs lose value over time?

They hold futures that usually trade above spot VIX and must be rolled, which costs money in calm markets.

Go deeper with Rebel Intel

What is the VIX doing today?Is volatility cheap or expensive right now?How do traders hedge with VIX options?

Educational only, not investment advice. Options involve risk and are not suitable for all investors. See how Intel is reviewed.