Wednesday, February 4, 2009

Key Concept - VIX

VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index. It describes the expected volatility for the market over the next 30 days, and is known as the "fear index". There are three variations: VIX, VXN, and VXD which describe the S&P 500, NASDAQ and Dow, respectively.

Generally, a VIX value over 30 represents high volatility, while one less than 20 corresponds to calm times in the market. Note that high volatility can occur during a bull or bear market.

The VIX reached an intra-day high of 98.53 on Oct 24, 2008. For perspective: between 1990 and Oct 08, the VIX averaged around 19.

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