What Is the VIX? Understanding Wall Street's 'Fear Gauge'

The Cboe Volatility Index (VIX) measures the stock market's expectation of volatility over the next 30 days, based on S&P 500 options prices. Because it tends to jump when investors are anxious, it's often called Wall Street's "fear gauge."

How to Read the VIX

The VIX is expressed as an annualized percentage. Roughly speaking:

• Low readings (often in the low-to-mid teens) suggest calm markets.
• Readings around 20–30 suggest elevated uncertainty.
• Readings above 30–40 typically appear during sharp sell-offs and crises.

The VIX usually moves in the opposite direction from stocks: when the S&P 500 falls sharply, the VIX tends to rise.

How Investors Use the VIX

• Sentiment check: A spiking VIX signals fear; some contrarians see extreme readings as potential buying opportunities.
• Risk awareness: High volatility means wider price swings, which affects options prices.

Can You Invest in the VIX?

Not directly. Some ETFs and ETNs track VIX futures, but they're complex, short-term trading tools that can lose value steadily over time. Most long-term investors should avoid them. Read about safer approaches in our guide to managing stock market risk and our explainer on bull and bear markets.