CBOE Volatility Index (VIX): what it is and how to trade
Published on: 08/12/2021 | Modified on: 20/09/2022
The VIX index is a popular measurement for traders to quickly judge market volatility. It can also provide trading opportunities, with some traders using it to diversify their portfolio or others as an effective hedging tool.
In this guide, discover what the VIX volatility index is and how you can start spread betting or trading CFDs on volatility-related instruments, along with key considerations when doing so. Keep reading to discover how it works and how you can use it to trade on volatility.
- The VIX index measures and predicts market volatility (how quickly prices are likely to change) over the next 30 days
- Traders can use it to judge market risk, fear and uncertainty, which is why it’s often referred to as ‘the fear index’
- Its value is not determined by stock prices but instead averages the weighted prices of S&P 500 options
- You can trade on it via spread bets, CFDs, forward contracts, ETFs and ETNs
- It can be effective way to hedge, as its performance trend is naturally the direct opposite of the S&P 500 and other world market indices