Introduced in 1993, the Chicago Board Options Exchange Volatility Index (VIX) measures market volatility and gauges investor fear, which explains its better known name — the fear index. Right now VIX is trading very high and indicates that investors are uncertain about how the market will perform over the next 30 days.
Current levels suggest that investors think the S&P 500 will fluctuate about 20 percent during the next month, something The New York Times calls "an almost unheard-of swing." While the index reports a good track record in gauging the market, like the upswing after 9/11, some traders see the attention on VIX as adding to the problems and sustaining fear of the market.
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That VIX index isn't a sure thing. A level of 40 was believed to be an extremely high point of fear, and that people should be buying stocks when the VIX is 40. Then the market continued to fall and the VIX went to 80.
1well i think that to people who are savvy in this stuff - it makes sense, but to me i think that i fear the market roller coaster regardless of whether or not i know that they have this in place.
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