The Need For Speed: How Cboe’s New Volatility Index is Built to Track Next-Day Expectations
The original Cboe Volatility Index just marked its 30th anniversary. The VIX, as it’s commonly known, was launched in April 1993 as a way to measure expected volatility of the S&P 500. How? By distilling the prices of thousands of different options contracts into a single number. Rightly or wrongly, the VIX and its easy quote became Wall Street’s “fear gauge.” It provided- and still provides – a good look forward at investor expectations for 30 days’ worth of market volatility.
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