VIX

CBOE Volatility Index — measures the market's expectation of 30-day S&P 500 volatility implied by options prices. Known as the 'fear gauge': above 30 signals stress, below 15 signals calm.

The VIX measures the market's expectation of 30-day S&P 500 volatility as implied by the prices of options contracts across a wide range of strikes. A reading of 20 implies markets expect the S&P 500 to move roughly ±5.8% over the next month (20 ÷ √12). It is not a directional indicator — it rises whether options traders expect a crash or a melt-up — but in practice it spikes almost exclusively during selloffs.

The VIX is not directly tradeable; futures and options on the VIX trade on CBOE, and ETPs like VXX give retail access. A persistent structural feature is 'VIX term structure contango': near-term VIX futures typically trade below longer-dated ones, causing short-vol strategies (selling volatility) to profit from roll yield during calm periods — but suffer catastrophic losses in sudden spikes. The February 2018 'Volmageddon' event wiped out several short-vol ETPs in a single session.