VIX
The Cboe Volatility Index: the S&P 500 volatility options are pricing for the next 30 days, as an annual percentage.
Formula
VIX = 100 × √(the 30-day variance implied by S&P 500 option prices)
How to read it
Around 12–15 is calm, above 25 stressed, above 40 panic. It tends to rise when stocks fall.
How to use it
Sizes the market's expected movement: a VIX of 16 implies about 1% a day (16 ÷ √252).
Limitations
Implied, not realized: it often overstates the moves that follow.
Also called: vix.