The VIX index, also known as the CBOE Volatility Index, is a measure of market expectations for future volatility in the U.S. stock market. It is derived from implied volatility, which is the price of put and call options on the S&P 500 index. A higher VIX index reading indicates higher implied volatility, which means that investors are expecting greater price swings in the stock market over the next 30 days. Conversely, a lower VIX index reading indicates lower implied volatility and suggests that investors expect more stable prices.
The VIX index is often referred to as the "fear gauge" because it is seen as a measure of investor sentiment. A high VIX index can signal that investors are fearful and may be selling stocks, while a low VIX index can suggest that investors are confident and may be buying stocks. Lastly, the VIX index — like most indices — are lagging indicators.
Note: Please read this site's 24Hour Journal disclaimer regarding finance and investing information.