The VIX or the Chicago Board Options Exchange Market Volatility Index (VIX) has become a commonly used market indicator.  Most typically it is used as a ‘fear index’ especially in light of the massive volatility seen in the midst of the credit crisis.  However the VIX is also just as likely to be misinterpreted than used correctly.

Most observers look for unusual activity in the VIX to identify market turning points.  For instance, in what was a pretty dull trading day the VIX plummeted.  This along with the structure of the VIX futures curve and its relationship to other indicators of volatility can help provide some clues to the market.  In today’s screencast a wrap-up of some recent commentary on the VIX.

Posts mentioned in the above screencast:

The VIX is plumbing depths not seen since April.  (Pragmatic Capitalism, Bespoke)

Daily chart of the iPath S&P 500 VIX Short-Term Futures ETN (VXX).  (Finviz)

An unusual collapse in the VIX.  (Don Fishback)

Adam Warner, “The VIX is exhibiting clear signs of complacency.”  (InvestorPlace)

Volatility has “joined the QE2 trade.”  (Data Diary)

What a low VIX:VXV ratio means for the market.  (Quantifiable Edges)

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.

Please see the Terms & Conditions page for a full disclaimer.