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".
Investor often use the VIX as a fear/greed gauge. What level of the VIX represents extreme fear or greed? For example, a VIX reading of 45 marked the equity lows in 2002. The same reading in 2008 would have missed the lows by 6-months. IMO, an quantitative measure of fear means little without equity price reference.
NYSE to VIX ratio:
Source: Investopedia.com
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