Volatility Index, Definition
Created in 1993 by the Chicago Board Options Exchange (CBOE) the Market Volatility Index (VIX) measures the volatility of the market and is used to determine risk. Traders use the VIX as a general inverse indicator of market volatility and sentiment. The VIX is the implied volatility on the S&P 100 (OEX) option, calculated from both calls and puts that are near the money. Normally the VIX has an inverse relationship to the market, which means that a rising stock market carries less risk and a declining stock market carries more risk.