By Dr. Carla Pasternak
We investors have witnessed some of the most tumultuous markets in recent memory. The Dow Jones Industrial Average lost more than 1,000 points in the opening minutes of trading on Monday, August 24. The S&P 500 dropped 5%, and implied volatility, measured by the CBOE Volatility Index (VIX), briefly jumped to 53. That's well above the long-term average of 19, a level at which the VIX has sat mostly beneath since 2012.
Volatility appears to have peaked for now as nervous investors hesitate to make bets on stocks ahead of the central bank’s policy decision due later this week. But the VIX is still hovering above the 15-20 level of a normal market environment, and many traders expect the volatility could continue.
The VIX is generally considered a leading indicator of the stock market's expected volatility. It's designed to measure how much volatility the market is expected to show -- not ... Log in or subscribe to continue reading.