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Fear Index (VIX)
Chicago Board Options Exchange
Officially known as the Volatility Index (VIX), the "Fear Index" was developed in 1993 by the Chicago Board Options Exchange to measure market volatility and investor sentiment. Index values are based on the premiums paid by investors buying options tied to the price of the Standard & Poor's 500-stock index. When investors have low confidence in the market, they tend to pay higher premiums as a form of insurance. The Fear Index rises as a result.