I’ve read many places that the VIX index is “the fear index” of the stock market. Nobody ever goes any deeper than that. I get that it’s a complex computation based on the change in price of a lot of stocks, and that it roughly correlates to volatility in the market. But “fear”?
In: Economics
The vix measures investor sentiment based on options trading used to gage what investors think the s&p500 is going to do
When a lot of options traders start betting the future price is going down; the vix goes up
We call this fear; people are afraid of the “impending doom”
Investing has a human component and a panicked crowd can move stock price….the stock market is a voting machine first then a weighing machine
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