VIX

The VIX is Cboe's index of expected S&P 500 volatility over the next 30 days, computed from the prices of a strip of SPX options. A VIX of 20 translates to the options market pricing roughly a 20% annualized swing — about 1.25% expected daily moves (20 divided by the square root of 252 trading days).

It is called the fear gauge because it rises when demand for downside protection bids up option prices. The long-run average sits near 19-20; readings below 14 mark complacent, grinding markets, while spikes above 30 accompany selloffs. The historic extremes — an 89.53 intraday print in October 2008 and an 82.69 close in March 2020 — marked full-blown panics.

The VIX itself cannot be bought. Traders express views through VIX futures, options on those futures, and ETPs — instruments whose futures-curve mechanics (contango bleed, roll costs) routinely surprise people who treat them like the index.