The Cboe Volatility Index uses the name VIX for its measure of expected S&P 500 volatility.
The VIX is calculated from prices of S&P 500 index options. Rather than measuring the market’s past movements, it reflects the level of volatility that options prices imply over approximately the next 30 days. Because option demand often rises during periods of uncertainty, financial media commonly call it the “fear index.”
The Chicago Board Options Exchange introduced the original VIX in 1993. The current methodology, introduced in 2003, uses a broad range of S&P 500 put and call options instead of relying on a narrow set of at-the-money options.
The VIX is quoted as an annualized percentage, not as a direct forecast of whether share prices will rise or fall. A higher reading indicates greater expected volatility, but it does not by itself identify the market’s direction. This makes it different from a stock-price index such as the S&P 500.