International Investing

The VIX or volitality index is sometimes called the “fear gauge” for its ability to discern market sentiment. Fortune magazine discussed how to play this indicator in any market direction:

The VIX doesn’t measure actual stock market volatility. Instead, it tracks trading in options on the S&P 500 to indicate how much investors expect the market to move over the next 30 days. As people expect bigger movements, options become more expensive. The VIX measures this price.

Moreover, volatility tends to increase as equities markets fall, so investing in the VIX can be a hedge against falling stock prices.

If you believe that the market will continue to gyrate madly, you can buy VIX call options (the right to buy) or puts (the right to sell), via an options trading account with a broker like Schwab, TD Ameritrade or Fidelity.