VIX

The Cboe Volatility Index is calculated from the prices of options on the S&P 500. Options cost more when traders expect larger moves, so the index works backwards from those prices to the volatility they imply, stated as an annualized percentage for the coming 30 days.

A reading of 20 implies an annualized swing of about 20%, or roughly 1.3% on a typical day. Readings in the low teens have tended to go with calm markets, and the largest spikes came in sharp sell-offs: the index closed above 80 in late 2008 and again in March 2020.

It is a forecast priced by the market rather than a record of what happened, and it describes the index rather than any particular portfolio. Because it tends to jump when stocks fall, it is often called the fear gauge.