In This Article:
Kenny Glick, owner of HitTheBid.com, joined Stocks In Translation to highlight the importance of understanding and using the CBOE Volatility Index, or VIX, (^VIX). He says, "well, the VIX in particular... is volatility. So people will buy into the VIX when they think there's something going to happen bad. What it... basically tries to talk about is the fear that's built into the market."
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This post was written by Neil Mulcahy.
Can you just explain in basic terms what the VIX is and what you do with it?
Okay. Well, the VIX in particular is the is is volatility. So people will buy into the VIX when they think there's something going to happen bad. What what it basically tries to talk about is the fear that's built into the market. So most of the time you have a complacent VIX and it's very low, and then it has these massive spikes.
What's low?
Low is about around 12 or 13. So we're talking around 38, 48, 40, and it was moving like a 2% move in the VIX was was is exciting. I think we were at 200% that night. So it was absolutely incredible. And what the UVXY is, it reflects mostly what the VIX is doing and in the S&P futures market. So it was just an absolute bloodbath if you were on the wrong side of that. But again, if you weren't overleveraged and you weren't on margin, you could fight through it. And what was a $65 stock is right back to $22 in just 10 days later. And suddenly, where did all that chaos go? Where's all the fear? It's gone. Poof.
Okay.
Wow.
