Vix (Chicago board options exchange volatility index), also known as market panic index, is used to reflect the volatility of S&P 500 index futures and measure the expected volatility of the market in the next 30 years. It is usually used to assess future risks. Therefore, it is also called the panic index.

Although VIX index reflects the fluctuation degree in the next 30 days, it appears in the probability of normal distribution in the form of annualized percentage. For example, if the VIX index is 15, which means that the expected annual volatility is 15%, then the standard deviation of the expected volatility in the next 30 days is 4.33%, that is, the probability of the S&P 500 index fluctuating within plus or minus 4.33% within 30 days is 68% (the probability that the normal distribution is covered by plus or minus one standard deviation is 68%, and it is covered by plus or minus two standard deviations). In other words, after 30 days, there is at most a 68% chance that the S&P 500 will rise or fall within the range of 4.33%. The VIX index itself cannot be traded. However, traders can use VIX options and VIX futures. After the rise of ETF, vxx and uvxy ETF which are optimistic about VIX appeared. Then ETF shorting VIX is XIV.

It should be noted here that many investors often choose vxx or uvxy as short-selling or hedging tools, because a sharp decline in the market is often accompanied by a sharp rise in VIX. In most cases, this strategy is not a problem. However, before choosing these tools, it must be clear that the rise of volatility is usually a strong uncertainty of the market for the future. Once the uncertainty is determined, even if the market continues to fall (of course, the magnitude is not very large), long VIX can not perfectly achieve the purpose of shorting the market. In other words, vxx and uvxy had a very explosive short-selling effect at the beginning of the worst market decline, that's all. This also explains a question that we often see: why the market has fallen, but VIX has not risen much. In addition, two ETFs, vxx and uvxy, have a natural defect. They follow the trend of VIX short-term futures. Futures have a maturity date. When they expire, they must be turned in. In the past year, VIX basically hovered at the lowest point in history. Therefore, the constant values of vxx and uvxy will be worn out due to constant flipping.