Measuring peoples anxieties over the markets | Marketplace From American Public Media

Measuring peoples anxieties over the markets | Marketplace From American Public Media.

The Market Volatility Index, or the VIX, quite literally measures how investors are feeling about the stock markets — which these days is pretty volatile. Its inventor discusses how the chart works

A sample chart of the VIX

A sample chart of the VIX. (CBOE/VIX)

KAI RYSSDAL: What I’m about to say may sound counter-intuitive, but pay no attention to the Dow. Not the Nasdaq or the S&P, not the Wilshire 5000 or the Russell 2000.

You want to know what’s going on in the markets? Dial yourself over to the Chicago Board Options Exchange and check out something called the VIX: the Market Volatility Index. It measures — almost literally — how freaked we really are. It looks at how investors feel about the future volatility of the markets by measuring what kinds of precautions they take to protect their portfolios, their investments.

Robert Whaley is a professor of finance at Vanderbilt University. He’s also the father of that fear index. Welcome to the broadcast.

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