The VIX and VXN measure expected market volatility, helping commodity traders gauge risk, spot sentiment shifts, and time entries when fear or complacency moves prices.
The VIX and VXN indexes are measures created by the Chicago Board Options Exchange (CBOE) to gauge market volatility. This guide explains how they reflect market expectations, including reading potential buy and sell signals in chart examples.
What Are VIX and VXN?
- The VIX is the 30-day annualized implied volatility of the S&P 500 Index Options.
- The VXN is the 30-day annualized implied volatility of the Nasdaq 100 Index Options.
When markets crash or move downward quickly, put options often become quite popular. Traders bid up the price of these put options, which manifest as an increase in the implied volatility level. Thus an increase in the VIX and VXN index.
Relationship Between Prices and VIX/VXN
The basic relationship between stock and index prices and the VIX and VXN is as follow:
- When prices fall, the VIX and VXN indexes rise.
- In contrast, when prices rise, the VIX and VXN indexes fall.
The following chart of the S&P 500 exchange traded fund (SPY), top half of chart, shows the inverse relationship between it and the $VIX Volatility Index, bottom half of chart:
Notice how, in this example, an uptrend in the price of the S&P 500 is accompanied by a downtrend in the level of the $VIX.
The next chart of the Nasdaq 100 exchange traded fund (QQQQ) shows potential buying opportunities when the $VXN spikes higher:
VIX & VXN Potential Buy Signal
When the $VIX or $VXN spike (usually they both spike during the same periods) a trader might go contrarian and buy.
If history repeats itself, buying $VIX and $VXN spikes may prove profitable. Nevertheless, the Mutual Fund mantra applies: “Past performance is not indicative of future performance“.
The trend of the $VIX and $VXN indexes can add another helpful level of analysis to price and volume indicators.
Where to Trade Using Technical Analysis
Further Reading on Volatility Indicators
These volatility tools complement VIX & VXN Indexes: Mass Index, Standard Error Bands, and Ulcer Index.
Technical analysis is most widely used in CFD and forex trading. If you’re ready to apply these techniques, browse our vetted CFD brokers or forex brokers.
Update history
This page was revised 9 times between May 2020 and April 2026.
Added cross-linking to CFD and forex broker resources in Further Reading section with embedded broker comparison tool.
Streamlined Further Reading section by removing extensive technical analysis topic list and broker comparison content, refocusing on volatility-specific indicators.
Refined heading for conciseness and expanded sentence to clarify that broker reviews highlight charting tool offerings.
Refined section heading and expanded guidance to clarify that brokers are evaluated for charting tool availability.
Restructured page with new introductory summary, table of contents, broker comparison table, and refined explanations by removing ticker symbols, improving grammar, and reorganizing technical indicators section.
Removed duplicate "Stochastic RSI" entry from technical indicators list and simplified broker availability language.
Added new "How to Start Trading Commodities" section with broker recommendations and expanded "More Technical Indicators" list with nine related indicators.
Removed lengthy disclaimer paragraph from VIX & VXN Potential Buy Signal section.
Restructured content by separating foundational definitions and concepts into discrete paragraphs for improved readability and organization.
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