Volatility Index (VIX)

The Volatility Index, commonly known as the VIX, measures market expectations of future volatility, primarily based on options prices for the S&P 500 index. Often referred to as the "fear gauge," a higher VIX indicates increased uncertainty or fear among investors, suggesting they expect larger price swings in the market. Conversely, a lower VIX signals confidence and stability. Investors use the VIX to assess market sentiment and to make informed decisions about buying or selling stocks, as well as to hedge against potential risks in their portfolios.