Volatility index
An index designed to track how fast prices are changing in the market in the markets based on options activity. When markets are calm, volatility levels are low. There are three volatility indexes as compiled by the Chicago Board Options Exchange. VIX, the most widely used, tracks the S&P500, VXN tracks the Nasdaq and VXD tracks the Dow Jones Industrial Average. All three are used as an indicator of investor sentiment with high levels pointing to pessimism and fear and low levels suggesting optimism and confidence.
This definition is for general information purposes only