VIX - CBOE Volatility Index

AAA

DEFINITION of 'VIX - CBOE Volatility Index'

The ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge."

There are three variations of volatility indexes: the VIX tracks the S&P 500, the VXN tracks the Nasdaq 100 and the VXD tracks the Dow Jones Industrial Average.

INVESTOPEDIA EXPLAINS 'VIX - CBOE Volatility Index'

The first VIX, introduced by the CBOE in 1993, was a weighted measure of the implied volatility of eight S&P 100 at-the-money put and call options. Ten years later, it expanded to use options based on a broader index, the S&P 500, which allows for a more accurate view of investors' expectations on future market volatility. VIX values greater than 30 are generally associated with a large amount of volatility as a result of investor fear or uncertainty, while values below 20 generally correspond to less stressful, even complacent, times in the markets.

RELATED TERMS
  1. CBOE Nasdaq Volatility Index - ...

    A measure of market expectations of 30-day volatility for the ...
  2. OEX

    The ticker symbol used to identify index options traded on the ...
  3. Out Of The Money - OTM

    A call option with a strike price that is higher than the market ...
  4. Put

    An option contract giving the owner the right, but not the obligation, ...
  5. VIX Option

    A type of non-equity option that uses the CBOE Volatility Index ...
  6. Call

    1. The period of time between the opening and closing of some ...
Related Articles
  1. Asset Allocation: The First Step Toward ...
    Investing Basics

    Asset Allocation: The First Step Toward ...

  2. The Credit Crisis And The Carry Trade
    Forex Education

    The Credit Crisis And The Carry Trade

  3. Volatility - The Birth Of A New Asset ...
    Options & Futures

    Volatility - The Birth Of A New Asset ...

  4. Introducing The VIX Options
    Options & Futures

    Introducing The VIX Options

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center