VIX

The VIX is an index published by the CBOE that measures how much volatility investors expect in the S&P 500 over the next 30 days, calculated from the prices of S&P 500 options. It is widely nicknamed the fear gauge, or fear index, because it tends to spike when investors are worried and stay low when markets are calm.

The VIX rises when investors are willing to pay more for options that protect against a large price swing, since that willingness to pay reflects how uncertain investors are about what happens next. It typically climbs sharply during sudden selloffs or periods of crisis, and drifts to lower levels during steady, calm uptrends when investors feel little need to hedge.

The VIX itself is not something an investor can buy directly. Instead, a range of exchange traded funds and futures contracts are built to track VIX related futures, letting investors speculate on or hedge against an expected rise in volatility, though these products often behave quite differently from the VIX index itself over longer holding periods due to how the underlying futures are structured.