Article Determining Market Direction With VIX

T2W Bot

Staff member
A Google search on VIX yields some unexpected pages: the name of a Czech rock band, a swim wear catalog and the Vienna Internet Exchange. Interesting stuff, but not quite what we had in mind. The CBOE’s VIX is a popular market-timing indicator. Let’s take a look at how VIX is constructed and how investors can use it to evaluate U.S. equity markets.
What Is the VIX? VIX is the symbol for the Chicago Board Options Exchange’s volatility index. It is a measure of the level of implied volatility, not historical or statistical volatility, of a wide range of options, based on the S&P 500. This indicator is known as the “investor fear gauge,” because it reflects investors’ best predictions of near-term market volatility , or risk. In general, VIX starts to rise during times of financial stress and lessens as investors become complacent. It is the market’s best prediction of near-term market volatility.
Implied volatility is the expected volatility of the underlying, in this...

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Legendary member
Interesting article.
Another indicator, albeit not a re-hash of the price, so truly adds new insight.

If a high VIX relates to investor fear, and looking to hedge their position, I guess the next question might be which specific strike price for the Puts were bought.Would that show any insight?
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