VolDex® Implied Volatility Indexes

See: Implied Volatility.

Implied volatility measures the likelihood that a particular price will make a big move in the near future. It's like a consensus opinion about how far a price is likely to move in a given time frame.

The measure is helpful in making investment decisions. Times with high volatility mean big swings...high risk, potentially high reward. Low volatility is like sailing with no wind: calm waters, but it's hard to get anywhere.

There are a few indexes that measure implied volatility. The most famous is the VIX. The VolDex index (official name: the Nations Large Cap VolDex Implied Volatility Index) is another alternative. The VolDex index uses a different formula for determining implied volatility than the VIX. It focuses on at-the-money options for the SPY (the S&P 500 index), while the VIX uses all options. Despite the different underlying basis, the VIX and the VolDex move in almost lock-step with each other, making either a worthwhile way to track implied volatility.