What is a good VIX index?

What is a good VIX index?

As a rule of thumb, VIX values greater than 30 are generally linked to large volatility resulting from increased uncertainty, risk, and investors’ fear. VIX values below 20 generally correspond to stable, stress-free periods in the markets.

Is VIX bullish or bearish?

Contrarian investors — who look for market opportunities by going against conventional thinking—consider a low reading on the VIX to be a bearish signal, indicating market complacency that may spell bad news ahead, while a high VIX reading is believed by some to be a bullish signal.

How do you read the VIX index?

The higher the VIX Index, the higher the fear, which, according to market contrarians, is considered a buy signal. Of course, the reverse is also true. The lower the VIX, the lower the fear, which indicates a more complacent market.

Is a higher or lower VIX better?

When the VIX is low, volatility is low. When the VIX is high volatility is high, which is usually accompanied by market fear. Buying when the VIX is high and selling when it is low is a strategy, but one that needs to be considered against other factors and indicators.

What does negative VIX mean?

What does it mean when the VIX is low? When the VIX is low, it means there is less market fear, more stability and long-term growth. The VIX typically has a negative correlation with the S&P 500, so when the VIX is low, the S&P 500 is usually experiencing a rise in price.

What is the highest the VIX has ever been?

Actual VIX Value Range The highest VIX close ever recorded was 82.69 on 16 March 2020 when the covid pandemic started. Taking also intraday moves into consideration, the all-time high in VIX has been 89.53 on 24 October 2008 (during the peak of the financial crisis).

Is the VIX a leading indicator?

The VIX is a forward-looking index. It is a leading indicator of the potential risk inherent in the S&P 500, and by proxy in the stock market. It is also a leading indicator of the level of fear that investors and traders have toward the market in the near term.

What happens when VIX goes down?

Can the VIX go to zero?

VIX options are powerful instruments that traders can add to their arsenals. They isolate volatility, trade in a range, have high volatility of their own, and cannot go to zero.

What did the VIX do in 2008?

A measure of fear in stocks just topped the levels during the financial crisis more than a decade ago. The Cboe Volatility Index, known as the VIX, surged nearly 25 points, or almost 43%, to close at a record high of 82.69, surpassing the peak level of 80.74 on Nov. 21 2008.

Does VIX predict future returns?

VIX has more often than not proved to be an over-estimate for future volatility, measured by next realized volatility. Source: S&P Dow Jones Indices LLC and CBOE. Data from Jan. 1, 1990, to Oct.

What is the correlation between VIX and S&P 500?

Generally, the VIX Index tends to have an inverse relationship with the S&P 500 Index. This negative correlation has earned the VIX Index the “fear gauge” moniker because VIX Index has a tendency to move up quickly when the broad market declines with velocity.