VIX — volatility index
VIX
What it is
S&P 500 30-day implied volatility index, computed from option prices. Measures market "fear": the level of protection investors are willing to pay to insure against drawdowns. Often called the "fear gauge".
How to read it
VIX < 15 = complacency, calm market. VIX 15-25 = normal. VIX > 30 = stress, possible panic. VIX > 40 are rare and often associated with market bottoms (capitulation = historic opportunity). It's a CONTRARIAN indicator at extremes.
Common reference points
- Complacency — caution< 12
- Normal calm12 – 20
- Moderate stress20 – 30
- Panic30 – 50
- Capitulation — often a bottom> 50
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
VIX measures S&P 500 30-day IMPLIED vol, not realized vol and not actual risk. A low VIX can last a long time in a trending market. And the term structure (short vs long vol) tells a richer story than VIX alone.
Other measures — Macro — stress & sentiment
Educational content. Polaris is not a registered investment adviser and makes no recommendation.