"The VIX (officially the Chicago Board Options Exchange Volatility Index) measure volatility, the technical term for those wrenching market swings. A rising VIX is usually regarded as a sign that fear, rather than greed, is ruling the market. Put simply, teh VIX measures the degree to which investors think stocks will swing violently in the next 30 days. It is calculated in real time throughout the trading day, fluctuating minute to minute. The VIX, in its current form, measures premiums paid by investors who buy options tied to the price of the Standard & Poor's 500-stock index. In times of confusion or anxiety on Wall Street, investors are more eager to buy this insurance, and thus agree to pay higher premiums to get them. This pushes up the level of the VIX."
When Investors Sweat and Tremble, Eyes Turn to the Fear Index
by Michael Grynbaum
http://www.nytimes.com/2008/10/20/business/20vix.html?partner=rssnyt&emc=rss
Track the VIX here:
http://finance.yahoo.com/q?s=%5Evix
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