What it measures
The VIX is the market's estimate of how much the S&P 500 will swing over the next 30 days, expressed as an annual percentage. It is calculated by Cboe from the prices of a wide range of S&P 500 options. When investors rush to buy protection, option prices rise and so does the VIX. That is why it is called the "fear index".
A VIX of 20 implies the market expects annualised volatility of about 20%, or daily moves of roughly 20 / 15.9 = 1.3%. See Standard deviation and volatility.
What the levels mean
| VIX | Mood | Typical conditions |
|---|---|---|
| Under 15 | Calm, sometimes complacent | Steady rising markets |
| 15 to 25 | Normal | Everyday ups and downs |
| 25 to 35 | Elevated fear | Corrections, scary headlines |
| 35 to 45 | High fear | Sharp sell-offs |
| Over 45 | Panic | Crises such as 2008 and 2020 |
It mean-reverts
The VIX cannot trend up forever: fear fades as markets stabilise. It has always come back toward its long-run average of about 20. Every spike above 40 has faded within about 12 to 18 months. See Mean reversion.
Notable spikes
| Event | Peak VIX (close) |
|---|---|
| October 2008, financial crisis | About 80 |
| March 2020, COVID crash | About 83 |
| August 2015, China devaluation | About 41 |
| February 2018, "Volmageddon" | About 37 |
| August 2011, US downgrade | About 48 |
Contrarian reading
Because fear peaks near market bottoms, long-term investors often treat a high VIX as a time to buy rather than sell, echoing Warren Buffett's "be greedy when others are fearful". One rules-based version of this idea is VIX tier allocation.
Limits
The VIX says how uncertain the market is, not which way it will move. It can stay high for months in a bear market, and a low VIX can jump overnight.
Questions
What is a high VIX?
Above 30 signals real fear, and above 40 has only happened in crises. Below 15 signals calm or complacency.
Can you buy the VIX?
Not directly. Funds such as UVXY and VXX hold VIX futures, which lose value over time and do not track the index closely. They are short-term trading tools.
See also
- VIX tier allocation A rules-based strategy that shifts from cash toward stocks and leveraged ETFs as the VIX rises, with its five tiers, rebalancing rules and risks.
- Standard deviation and volatility What volatility means in investing, how standard deviation of returns is calculated and annualised, and typical volatility for stocks, bonds and leveraged funds.
- Mean reversion What mean reversion is, how prices and valuations tend to return toward an average, how traders use it, and why it fails when fundamentals change.
- AAII sentiment survey What the weekly AAII investor sentiment survey measures, its long-run averages, historical extremes, and how contrarian investors read bearish readings.
Pages that link here: Fundamentals vs technicals, Hype and market sentiment, Reading a market overview, Staying invested through downturns
Last updated September 30, 2026. Education only, not investment advice.