VIX
VIX is a special number that helps grown-ups who like to buy and sell stocks know how worried other grown-ups are about the stock market.
Imagine you have a toy box and you like to trade toys with your friends. Sometimes, you might worry that your friends will want to keep their favorite toys and won't want to trade with you. But other times, you might feel like your friends are happy to trade and you can get lots of new toys.
Grown-ups feel the same way about buying and selling stocks. Sometimes they feel like other grown-ups are worried and don't want to buy stocks, so they might not be able to sell their stocks for as much money. But other times, they feel like other grown-ups are happy to buy stocks and they can make lots of money selling their own stocks.
VIX helps grown-ups see how worried or happy other grown-ups are. It does this by looking at how much people are willing to pay for special options that can protect them from losing money in the stock market. If people are willing to pay a lot of money for these options, it means they are worried and VIX goes up. If people aren't willing to pay much for these options, it means they are happy and VIX goes down.
So, if you hear people talking about VIX, just imagine them talking about how happy or worried they think other grown-ups are about buying and selling stocks.
Imagine you have a toy box and you like to trade toys with your friends. Sometimes, you might worry that your friends will want to keep their favorite toys and won't want to trade with you. But other times, you might feel like your friends are happy to trade and you can get lots of new toys.
Grown-ups feel the same way about buying and selling stocks. Sometimes they feel like other grown-ups are worried and don't want to buy stocks, so they might not be able to sell their stocks for as much money. But other times, they feel like other grown-ups are happy to buy stocks and they can make lots of money selling their own stocks.
VIX helps grown-ups see how worried or happy other grown-ups are. It does this by looking at how much people are willing to pay for special options that can protect them from losing money in the stock market. If people are willing to pay a lot of money for these options, it means they are worried and VIX goes up. If people aren't willing to pay much for these options, it means they are happy and VIX goes down.
So, if you hear people talking about VIX, just imagine them talking about how happy or worried they think other grown-ups are about buying and selling stocks.