What Is the CBOE Volatility Index (VIX) and Why It’s Important to Option Traders

Cole Turner

The CBOE Volatility Index, or VIX, is an index that shows the stock market’s expected 30-day volatility.


It is important to understand that the VIX allows investors to watch the volatility of the stock market easily. Knowing when prices are expected to increase or decrease will help an investor make better investment decisions overall.

This article will explain what the VIX is and indicate that there is a possibility of trading VIX options. This opens a new window of opportunity to make a profit.

The VIX is based on the prices of call and put options on the S&P 500 Index (SPX). It is used globally by a number of market participants as the premier measure of stock market volatility.


The VIX is known as an investor’s “fear gauge.” It moves up when market prices are falling and there is uncertainty in the market. The VIX moves down when market prices are steadily rising and there is less fear in the market.

When the VIX value is greater than 30, then that generally means that there is a large amount of volatility in the market due to investor fear and uncertainty. When the VIX is less than 20, then that generally means volatility and uncertainty is low.

The VIX gets its value by estimating how volatile the prices of options on the S&P 500 will be between the current date and the expiration date of the option.

Since the VIX has a value in itself, VIX options are available to be traded and are offered by the CBOE. If an investor expects the VIX to spike up or down, then trading VIX options gives the investor an opportunity to capitalize from that.


There is a lot of potential to profit from the VIX. Whether that profit comes from reading the volatility of the market, or trading VIX options, having an understanding of the VIX is a necessity in order to make those profits.

Exclusive  Introducing Basic Examples of Trading Options -- Calls and Puts
share on:

Like This Article?
Now Get Mark's FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE

share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader


Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor

George Gilder

George Gilder is the most knowledgeable man in America when it comes to the future of technology and its impact on our lives.  He’s an established investor, bestselling author, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.

Product Details

  • Technology Report
  • Technology Report PRO
  • Moonshots
  • Private Reserve
  • Millionaire Circle


DayTradeSPY was founded by head trader Hugh Grossman, a retired internal auditor for a Fortune 500 company. After years of first-hand experience trying out one trading strategy after another, Hugh instead developed his own trading system centered around day trading SPY options. That’s it... Nothing else.

Product Details

  • Trading Room
  • Pick of the Day
  • Inner Circle
  • Online Workshops