What is the NASDAQ Volatility Index (VXN)?
Most people have heard of the VIX (the Fear Index), which measures the volatility of the S&P 500. However, if you primarily invest in tech stocks, you need to pay attention to the VXN (CBOE NASDAQ 100 Volatility Index).
How does VXN differ from VIX?
The VXN is calculated using the exact same methodology as the VIX, but its underlying asset is options on the NASDAQ-100 Index (NDX), rather than the S&P 500. The NASDAQ-100 is concentrated with the world's top tech giants (like Apple, Microsoft, Nvidia, etc.).
Because tech stocks are inherently more volatile than traditional industry stocks, the VXN value is usually a few points higher than the VIX. When the VXN surges, it indicates that options traders are frantically buying protection (Put Options) against downside risk in tech stocks.
Application Scenarios
By comparing the VXN and VIX, you can determine whether market panic is a "localized tech stock crash" or "broad economic panic":
- If VXN spikes but VIX remains relatively stable: It indicates that capital is selling off tech stocks and might be rotating into traditional value stocks.
- If VXN is extremely high (>30): It means the tech sector is in a state of Extreme Fear.
Set NASDAQ Volatility (VXN) alerts so you don’t have to watch it
If your workflow is “pay attention when volatility or sentiment is unusually high or unusually low”, alerts are often better than constantly checking charts.
Set free email alerts for NASDAQ Volatility (VXN)