What Is the Relationship between the VIX Index and Implied Volatility?

The VIX, or CBOE Volatility Index, is often referred to as the "fear gauge" and is a key measure of implied volatility. It is calculated from the prices of a wide range of S&P 500 index options and represents the market's expectation of 30-day forward-looking volatility.

Essentially, the VIX is a standardized, broad measure of the implied volatility of the S&P 500. A high VIX suggests high market uncertainty and fear, which translates to higher option premiums across the index.