The VIX is highly watched by Bloomberg, CNBC and many Market Watch Dogs, and if someone is wonder what the VIX is, ... and thanks for the mention, we've never talked about this important indicator here before.
Definition of 'VIX - CBOE Volatility Index'
The ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge."
There are three variations of volatility indexes: the VIX tracks the S&P 500, the VXN tracks the Nasdaq 100 and the VXD tracks the Dow Jones Industrial Average.
The first VIX, introduced by the CBOE in 1993, was a weighted measure of the implied volatility of eight S&P 100 at-the-money put and call options. Ten years later, it expanded to use options based on a broader index, the S&P 500, which allows for a more accurate view of investors' expectations on future market volatility. VIX values greater than 30 are generally associated with a large amount of volatility as a result of investor fear or uncertainty, while values below 20 generally correspond to less stressful, even complacent, times in the markets. ~~
So if its at the top (Excessive Bearishness), ... bottom (Excessive Bullishness).
Here is the VIX chart and its just the opposite of a normal chart. The top part is bearish and the bottom is bullish.
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