Essentially fear creates value. Determining where value begins challenges every “buy” decision. Measuring fear is what the VIX does since the pricing of the Vix is based on the demand for options. The greater the demand for puts, the greater the fear. The greater the demand for calls, the greater the greed. The VIX is an indicator of market psychology.

The Vix currently predicts a 5% range of volatility. We are having massive price ranges in the equity markets. Trading in this market seems to be similar to standing on the beach waiting for a tsunami or in front of a New York City transit bus.

Eventually, volatility will diminish or settle within normative ranges.