Jan. 6 at 10:33 PM
Taking a step back and looking at where the VIX was before it jumped this week helps put the move into context, according to Mandy Xu, head of derivatives-market intelligence at Cboe. With the VIX near historical lows, a somewhat small gain in terms of absolute points could seem more dramatic when looking at the change as a percentage. That’s one of the reasons Xu said that she likes to measure the VIX’s moves in points instead of percentages.
But Xu noted that multiple variables go into calculating the VIX, and that it isn’t just a fear gauge as its commonly used moniker suggests.
“The key thing to note is that the VIX, in itself, is not necessarily a measure of fear. It’s much more accurately a measure of uncertainty, and uncertainty can be to the upside as well as the downside,” she told MarketWatch.
Xu pointed to Cboe’s VIX Decomposition tool as a way for traders to further break down the variables that go into calculating the VIX.
$VIXY $VIX