What is the VIX?

The VIX is actually just the ticker symbol of the CBOE Volatility Index, or the "Fear" Index as most investors call it. The VIX measures implied volatility for S&P 500 options. It is quoted in percentage points and translates very roughly into the expected move or change in the S&P 500 over the next one year. For example, if the VIX is currently at 15 then we could expect a 15% move in the S&P 500 up or down over the next year or approximately 1.25% every month between now and then. The VIX is also one of the main ways that we can tell if option pricing is rich or cheap because of the high or low implied volatility which directly affects how an option is priced.