How Does the Cboe’s VIX® Index Work?

The Cboe did not create the VIX® as an academic exercise, or as a service to stock market prognosticators everywhere.  They created it because they wanted to make money on volatility.  It took them two tries, but the Cboe succeeded in developing a volatility index that forms the backbone of a host of volatility products.  The Cboe offers some of these products, but other companies have …

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