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What is the VIX, in plain words?

The VIX is Cboe's volatility index: a measure of market expectations of near-term volatility, conveyed by S&P 500 Index option prices 1. It measures 30-day expected volatility of the S&P 500, worked out by averaging the weighted prices of SPX puts and calls over a wide range of strikes 2. Its formula measures time in years and multiplies the result by 100 2, so a VIX of 20 reads as 20% a year, the way an option's volatility is quoted 3.

Choose a VIX level and a level for a made-up index (not the S&P 500's), and see the one-standard-deviation move over 30 days that the level implies.

Source: the square-root-of-time scaling of a yearly volatility 3, applied to a VIX level and an index level that are both made up; not market data. For learning; not advice.

From a yearly figure to a 30-day move

Volatility is quoted as a yearly number and scaled to a shorter period by the square root of time 3. A VIX of 20 means 20% a year: over 30 days, 20% × √(30/365), about 5.7%; at 40, about 11.5%. That is one standard deviation, inside which about 68% of outcomes fall on a normal curve 4. It is what the prices assume, not a forecast.

Where it comes from

Not from a survey or a vote: from the prices of S&P 500 index options, across many strikes 2. Cboe introduced the index in 1993 and, with Goldman Sachs, updated its method in 2003 2. It is computed directly from those option prices, not solved with a pricing model, so it moves when they move 2.

What this shows, and what it doesn't

Arithmetic on a made-up level. The VIX describes index options, not any one stock's; a stock's own options carry their own implied volatility 5. Nothing here says where the VIX, or the market, is going.

Go further

What is implied volatility? →The same idea, for one option.What is an option's expected move? →The scaling, for any stock and date.
Sources (5), checked 20 October 2026 and 28 October 2026
  1. Cboe Global Markets, “Cboe Volatility Index (VIX Index)”. Read it (read 28 October 2026)
  2. Cboe, “The CBOE Volatility Index – VIX” (white paper), copy held by the Options Industry Council. Read it (read 28 October 2026)
  3. CME Group, “Understanding Options Volatility” (Introduction to Options course). Read it (read 20 October 2026)
  4. David M. Lane, “Areas Under Normal Distributions”, Online Statistics Education (onlinestatbook.com). Read it (read 20 October 2026)
  5. CME Group, “Implied Volatility”. Read it (read 20 October 2026)

Now try it on a scenario of your own

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