What is VIX (Volatility Index)?
The CBOE Volatility Index (VIX) is calculated from the prices of S&P 500 index options. It represents the market's expectation of annualized volatility over the next month. Generally: below 15 = complacency, 15-20 = normal, 20-30 = elevated stress, above 30 = panic. The VIX typically spikes during market crashes and trends lower during bull markets.
Why it matters for investors
The VIX is the most-watched risk-sentiment indicator. Asset allocators use it to gauge defensive positioning. Persistent low VIX often precedes corrections (complacency); spikes above 40-50 historically mark capitulation lows that have been buying opportunities.
