The Volatility Index or VIX is the annualized implied volatility of a hypothetical S&P 500 stock option with 30 days to expiration.

The primary way to trade the VIX is to buy exchange-traded funds (ETFs) and exchange-traded notes (ETNs) tied to the VIX itself. ETFs and ETNs related to the VIX include the iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) and the ProShares Short VIX Short-Term Futures ETF (SVXY).

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VIX expiration and settlement. For example, the holder of a 15 call would receive $500 at expiration from the holder of a short position in the 15 call if the settlement value for VIX options is 20 [(20 – 15) x $100 = $500]. VIX options are European style, so they can be exercised only at expiration.

The VIX index measures volatility by tracking trading in S&P 500 options. Large institutional investors hedge their portfolios using S&P 500 options to position themselves as winners whether the market goes up or down, and the VIX index follows these trades to gauge market volatility.

• The Best Volatility ETFs of October 2023.
• Simplify Volatility Premium ETF (SVOL)
• Short VIX Short-Term Futures ETF (SVXY)
• iPath S&P 500 VIX Mid-Term Futures ETN (VXZ)
• iPath S&P 500 VIX Short-Term Futures ETN (VXX)
• iShares MSCI EAFE Min Vol Factor ETF (EFAV)
• SPDR SSGA US Small Cap Low Volatility Index ETF (SMLV)

How to trade the VIX

1. Open an account with FOREX.com or log in to your existing account.
2. Search 'Volatility index' in our award-winning platform.
3. Choose your position and size, and your stop and limit levels.
4. Place the trade and monitor the market.

There are two ways to use the VIX in this manner: The first is to look at the actual level of the VIX to determine its stock-market implications. Another approach involves looking at ratios comparing the current level to the long-term moving average of the VIX.

Common strategies to trade volatility include going long puts, shorting calls, shorting straddles or strangles, ratio writing, and iron condors.

The Bottom Line. Vicks VapoRub has been used for many years as a cough and cold remedy. While this product is relatively safe to use when applied to the skin as directed on the package label, it should not be consumed or applied to the insides of the eyes, ears, or nose.

The VIX is a real-time index that represents the market's expectation of future volatility of the stock market. Its formal name is the Chicago Board of Options Exchange Market Volatility Index (VIX). Technically speaking, volatility measures the standard deviation of historical market prices.

VIX, or the annualized 30-day implied volatility of the S&P 500, is calculated throughout each trading day by averaging the weighted prices of a specific group of S&P 500 call and put options.

As a rule of thumb, VIX values greater than 30 are generally linked to large volatility resulting from increased uncertainty, risk, and investors' fear. VIX values below 20 generally correspond to stable, stress-free periods in the markets.

Key Takeaways. The CBOE Volatility Index, or VIX, is a real-time market index representing the market's expectations for volatility over the coming 30 days. Investors use the VIX to measure the level of risk, fear, or stress in the market when making investment decisions.