The economy and the market
VIX
Definition
The Cboe Volatility Index: the 30-day implied volatility of the S&P 500, calculated from SPX option prices and quoted as an annualized percentage.
Example
Say the VIX reads 20. Dividing by the square root of 12, about 3.46, turns that annual figure into roughly 5.8% for the coming month, so if the S&P 500 stood at 5,000, options would be pricing a typical move of about 290 points either way. A common misreading is that a VIX of 20 forecasts a 20% drop; it gauges the expected size of moves, not their direction.
Hypothetical numbers, for illustration only.
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