Investopedia: The VIX - Using The "Uncertainty Index" For Profit And Hedging

Volatility is a major factor in equity and option investments, and the Chicago Board Options Exchange Market Volatility Index (VIX), has been a popular and carefully-watched indicator almost from the moment it was launched. Though VIX may or may not be a rigorous substitute for risk, investors and financial commentators nevertheless watch this indicator to measure the tenor of investor attitudes about the market and the likely path of short-term trading. 

As a financial indicator in its own right, however, it is also possible for investors to use the VIX as a means towards profits or the protection of their portfolios. (Discover a new financial instrument that provides great opportunities for both hedging and speculation. Check out Introducing The VIX Options.)

VIX – What It Is (And Is Not)  
The VIX is a weighted index that blends together several S&P 500 index options, with the notion that the greater the premiums on these options, the more uncertainty about the direction of the market. In design, then, it is the square root of the 30-day period returns, and it is expressed as percentage points. As such, it is supposed to be a forward-looking representation of what sort of volatility the markets expect in the short term.

Read more: http://www.investopedia.com/articles/exchangetradedfunds/11/profit-from-vix.asp#ixzz1SmAvRneu

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FinancialEdge: 5 Reasons Not To Fear The Stock Market

According to a recent survey released by Prudential Financial, fear and disillusionment have once again grabbed hold of many individual investors. Nearly 60% of the survey respondents said that they had "lost faith" in the stock market, while 44% said that they are unlikely to ever put more money in the stock market again. (Why have stocks historically produced higher returns than bonds? It's all a matter of risk. Check out Why Stocks Outperform Bonds.)


Those are sobering statistics, but not terribly surprising. When times are good and the markets are running hot, people feel great about the markets and throw money at stocks. When times are bad, people swear off the markets and promise "never again" - until the next big thing dominates the headlines again.

For those who don't wish to ride that pendulum between frenzy and despondency, there are several solid reasons not to fear the market.

To read the complete column, please click the link:
http://financialedge.investopedia.com/financial-edge/0611/5-Reasons-Not-To-Fear-The-Stock-Market.aspx#axzz1Q2GXzo00