Coronavirus Volatility: What VIX Investors Must Know

The global COVID-19 outbreak has sent global stock markets into chaos. With massive drops followed by huge rebounds day after day, volatility has become an ever-present force that investors have to manage.

Many investors are looking for ways to turn volatility into profit. The CBOE Volatility Index, also known as the VIX, has become a key measure of just how panicked some investors are getting, but investors are also using the benchmark in more active ways as part of their overall investment strategies. Below, we'll look more at the VIX and why you should understand the role it can play in your portfolio.

The CBOE Volatility Index looks at the options markets to determine how much volatility market participants expect in the near future. By looking at different options and their prices, Cboe Global Markets (NYSEMKT: CBOE) is able to calculate a number that investors are implicitly using to guide their options trading. The higher the number, the more volatility investors expect.

Source Fool.com