The index measures the market’s expectation of future volatility. Based on options of the S&P 500® Index, the CBOE VIX index is widely used in the U.S to gauge the market volatility.
So why do you need this in your portfolio, and why is it different from volatility?
As discussed in my previous post, volatility is ex-ante. On the other hand, the Vix index uses options of the S&P 500® Index to calculate the market’s expectation of future volatility. The Vix index is a leading indicator.
Click on the image below to view the interactive dashboard.