Crypto and derivatives · updated October 21, 2026
What is the VIX (the fear index) and how do you read it
The VIX shows how much investors expect the S&P 500 to move over the next 30 days, expressed as a yearly percentage. It is calculated by the Cboe exchange from S&P 500 option prices. Because it jumps when the market falls sharply, it is also called the "fear index".
The VIX formula
- VIX
- The yearly implied volatility of the S&P 500, from options covering the next 30 days.
- √12
- Turns the yearly figure into a monthly one.
Worked example
The VIX is at 20. How much does the market expect the S&P 500 to move over the next month?
The market expects that, in about two cases out of three, the S&P 500 will be within ±5.8% of today's level a month from now.
How to read the VIX
The VIX went above 80 in the 2008 crisis and in March 2020. In calm periods it often sits between 12 and 15.
When the VIX can fool you
You cannot buy it directly: "VIX" products use futures and can lose a lot over time, even if the VIX comes back to the same level. A low VIX does not mean low risk: some of the biggest falls started from very calm periods.
Related terms
Learn it in the Academy
Questions about the VIX
What does a VIX of 30 mean?
That the market expects the S&P 500 to have a yearly volatility of 30%, meaning moves of about ±8.7% in a month. That is a level of stress.
Is there a VIX for Europe?
Yes. The VSTOXX does the same calculation for the Euro Stoxx 50 index.
These explanations are for information only. They are not a recommendation to buy or sell.
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