CBOE Volatility Index and Investor Fear Gauge

VIX and Investor Fear Gauge

In last month’s global economy up-turns and down-turns, the VIX indicator loomed large: market sell-offs à contagion à global financial market risk.

“The CBOE Volatility Index^® (VIX^®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. Since its introduction in 1993, VIX has been considered by many to be the world’s premier barometer of investor sentiment and market volatility.”

Quoting an article on “Index Intelligence EEMA Way to Play Emerging Markets“:

“Stocks within the emerging markets tend to suffer bigger losses when anxiety levels are on the rise and investors become more risk averse. This is confirmed by the fact that, during each of the recent declines in the EEM, the CBOE Volatility Index VIX has spiked higher. A spike in the VIX, which is sometimes called the market’s “fear gauge,” indicates that levels of market angst and risk aversion are on the rise.”