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Volatility Index

Index summarizing implied volatility from option prices, used as a gauge of expected market variability.

A volatility index measures expected market volatility, often derived from option prices. It provides a forward-looking gauge of investor sentiment and potential market risk.

For example, the VIX reflects expected S&P 500 volatility over the next 30 days. High VIX values indicate fear and uncertainty, while low values suggest market calm.

Volatility indices are widely used in trading, risk management, and portfolio hedging. They offer insight into potential price swings and inform strategic positioning.

Understanding volatility indices helps traders and analysts anticipate market turbulence, optimize hedging strategies, and adjust risk exposure in both financial and commodity markets.

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