Anika Begay
Traders work on the New York Stock Exchange table during afternoon trading on August 2, 2024 in New York City.
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A key indicator of expected volatility in the stock market hit its highest level in more than four years on Monday morning, as global stocks fell sharply.
THE Cboe Volatility Indexor VIX, topped 50 on Monday, up from about 23 on Friday and about 17 a week ago.
The VIX jumped above 50 on Monday morning.
This is the highest the VIX has reached since it hit an intraday high of 57.24 on April 2, 2024, shortly after the Federal Reserve’s emergency actions during the COVID-19 pandemic, according to FactSet. The VIX rose as high as 85.47 in March 2020, according to FactSet.
The VIX is calculated based on the market price for options on the S&P 500. It is designed to be a measure of expected volatility over the next 30 days and is often referred to as Wall Street’s “fear gauge.”
Since the Covid-related sell-off eased, the VIX has remained subdued, often trading below the 20 mark.
While VIX spikes often coincide with sharp market sell-offs, they can also be short-lived and precede a recovery in stocks.
“You have to keep an eye on the VIX. When the VIX peaks and starts to roll over and go down, the recovery can be just as quick,” Fundstrat head of research Tom Lee said on Vscek’s “Squawk Box” on Monday.
