What is the VIX, the "fear index"?
A measure of how much volatility the options market expects in the S&P 500 over the next 30 days. Below 15 is calm, above 30 is stress, above 40 is a crisis. It spikes when stocks fall.
The VIX is a number computed from the prices of options on the S&P 500. Options are insurance against price moves, and when investors are nervous they pay more for that insurance. The VIX converts those prices into an estimate of how much the index is expected to swing over the next month. Higher means more expected turbulence.
The rough scale: under 15 is a calm market, 15 to 25 is normal, above 30 means real stress, and above 40 happens only in crises. It hit 80 in October 2008 and again in March 2020. Because it rises when stocks fall, it earned the nickname "fear index."
You cannot buy the VIX directly, and the products that track it are notorious for losing money over time because of how they are built. Treat it as a gauge, not an investment.
For an ordinary investor it answers one question: how scared is everyone right now? A VIX of 35 alongside a 4 percent drop tells you the drop is part of a broad panic rather than something specific to your holdings. Historically, buying when the VIX is very high has worked out well for people with a long horizon, which is another way of saying that fear is usually overdone.
Informational only, not financial advice. Updated September 4, 2026.
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