Most traders have heard of the VIX, Wall Street’s famous “fear gauge” that measures expected volatility in the S&P 500. But far fewer are familiar with its cousin, the VVIX.
What Is VVIX?
The VVIX often called the “VIX of the VIX” measures how volatile the VIX itself is expected to be.
VIX tells you how volatile the S&P 500 is expected to be over the next 30 days.
VVIX tells you how volatile the VIX is expected to be.
Think of it this way:
If the VIX is the weather forecast, the VVIX is the confidence in that forecast.
Why Is VVIX Often Overlooked?
The VVIX isn’t quoted on financial news channels as often as the VIX because:
It’s more specialized, most retail traders already struggle to understand the VIX.
It’s mainly used by professionals, especially options traders and volatility specialists.
It’s indirect, while the VIX connects directly to stock market swings, the VVIX is one step removed, focusing on volatility of volatility.
But just because it’s overlooked doesn’t mean it’s useless. For traders who want deeper insight, the VVIX can provide valuable clues.
How Traders Can Use VVIX in Everyday Trading
VIX High, VVIX High: Fear is elevated, and the market is bracing for more uncertainty.
VIX High, VVIX Low: Fear is elevated, but the market is confident it understands the risk. The fear may be temporary.
VIX Low, VVIX High: No fear in the markets yet, but traders are quietly hedging for a potential volatility shock.
VIX Low, VVIX Low: Calm across the board. Markets are stable and confident.