The VIX of late has fallen well below the dramatic levels it experienced during the anxious days of the Financial Crisis. With Friday’s Advance GDP report, the interim elections of next week, and the next round of Quantitative Easing, will the VIX remain in such a relaxed state?
This chart series shows the VIX and S&P 500 over two timeframes. We’ll check back as appropriate to see if the calm is the new normal or the calm before the storm.
For a quick review of exactly what the VIX is about, Investopedia has a useful explanation:
VIX: The ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the “investor fear gauge”…. VIX values greater than 30 are generally associated with a large amount of volatility as a result of investor fear or uncertainty, while values below 20 generally correspond to less stressful, even complacent, times in the markets.