Volatility & the VIX Index
Volatility in financial markets refers to how much an asset's price fluctuates. Higher volatility means larger price swings; lower volatility means more stable prices. It's the single most widely-watched risk indicator in equity markets.
Two flavours
- Realised (historical) volatility: how much the price actually moved over a past period. Computed as the standard deviation of returns, annualised. A 30-day realised vol of 25% means roughly two-thirds of daily moves were within ±25%/√252 (~1.6% per day)
- Implied volatility: what options markets expect the future volatility to be, derived from option prices. Forward-looking
The VIX
The CBOE Volatility Index (VIX) is the most-referenced implied-volatility measure. It's the market's expectation of S&P 500 volatility over the next 30 days, expressed in annualised percentage points.
Common interpretations:
- VIX 10-15: low-vol regime, complacency. Historically the late stage of a long bull run
- VIX 15-20: normal range. Healthy two-way uncertainty
- VIX 20-30: elevated. Notable risk-off mood; rapid sector rotation common
- VIX 30-40: stress regime. Most healthy corrections see VIX peak here
- VIX 40+: crisis territory. March 2020 COVID panic peaked at ~82; 2008 GFC peaked similarly
The VIX is sometimes called the "fear gauge" — high VIX correlates with falling stocks. The relationship isn't deterministic but the negative correlation between VIX and SPX is one of the most stable in equity markets.
Why it matters for individual stocks
- Vol regime affects strategy: high-VIX environments favour mean reversion; low-VIX environments favour momentum
- Option-trade pricing: high IV makes options expensive; low IV makes them cheap. The same option structure carries very different risk/reward at VIX 15 vs VIX 35
- Sentiment signal: VIX feeds the CNN Fear & Greed Index as one of its seven components
Top Tier Newswire and volatility
We don't yet surface individual-stock implied vol on the public site, but the AI Top Trades evidence pack includes a 30-day volume ratio that captures unusual activity (volume vs 30-day average) — a related but distinct concept from implied volatility. The Fear & Greed gauge at the top of the live terminal includes the VIX component.