What Does a High Volatility Index (VIX) Reading Suggest about the Options Market?

The VIX, often called the "fear index," measures the market's expectation of 30-day forward-looking volatility. A high VIX reading suggests that market participants anticipate large and rapid price movements in the underlying asset, often due to high uncertainty or fear.

This increased expectation of volatility translates to higher option premiums, as the perceived probability of the option expiring in-the-money increases.