Analyzing the Fear Index
The fear index is something that you might have heard before; it’s a phrase widely used between stock market investors and traders as a general term to describe volatility in stocks. ‘Fear Index’, also sometimes referred to as the ‘fear gauge’, refers to the CBOE ‘Volatility Index’ – or the VIX. The VIX is used to measure the expected volatility on the stock market. It makes use of S&P 500 index options to calculate, to an extent, any predicted variance (or volatility) for the following 30 days. How Stock Prices Correlate with Market Volatility It’s hard to say for certain whether the Fear Index is an accurate way to measure or predict future realized volatility, as there are always outside contributions that may affect the…
