With the market volatility, you’re going to hear a lot about the VIX in the coming days…
Here’s a quick breakdown of what it is and why it matters:
The Volatility Index ("VIX") was created by the Chicago Board Options Exchange as a real-time market index representing the market's expectation of 30-day forward-looking volatility.
It is often referred to as the "Fear Index" by investors.
Let's take a look at how it works…
Volatility measures the magnitude of price movements—up and down—over a set period of time.
Historical volatility is based on actual historical price movements.
Forward-looking volatility—“implied volatility"—is inferred based on option prices.