VIX Today: The Fear Index in 2025, What to Expect and How to Take Advantage

January 2025 has brought volatility to the markets, and with it, the VIX has regained prominence. The CBOE volatility indicator surged nearly 30% in a single session when DeepSeek announced its AI model, triggering panic among investors who had heavily bet on U.S. tech stocks. But what exactly is this index, and why should you be paying attention to it in 2025?

Understanding what the VIX is today

The VIX is much more than a number on the screen. It is a measure that captures market expectations of the S&P 500’s volatility over the next 30 days. Created by the Chicago Board Options Exchange (CBOE) in 1993, this index has become the most reliable thermometer of risk sentiment on Wall Street.

Unlike the S&P 500, which reflects the price of 500 companies, the VIX is constructed from the prices of call and put options on that same index. Its calculation is continuous, updated every 15 seconds during trading hours, allowing investors to monitor in real time how the market perceives future risk.

The inverse correlation: the secret of the VIX today

The relationship between the VIX and the S&P 500 is probably its most important feature. When markets fall, the VIX rises; when they rise, the VIX tends to fall. This inverse relationship is no coincidence: it reinforces that greater uncertainty leads to higher expected volatility.

Historically, during crisis moments like 2008 or the 2020 pandemic, the VIX has reached extreme highs. In 2008, it hit 89.53 intraday points. During COVID-19, it jumped to 82.69. These numbers are not mere statistics; they represent the collective fear of millions of investors.

How to interpret risk levels in the VIX today

• 0-15 points: Relaxed market, high confidence
• 15-20 points: Moderate caution
• 20-25 points: Intermediate risk, attention recommended
• 25-30 points: Marked nervousness
• Above 30: Market panic

In January 2025, when the VIX exceeded 19 points due to the surprise of the Chinese AI model, it was in the caution zone. What was surprising was not the magnitude of the move but its speed and quick correction, likely facilitated by automatic fund rebalancing and hedging strategies.

What drives volatility in the VIX today

2025 has brought multiple catalysts of uncertainty:

Political changes: The Trump administration has generated conflicting expectations with threatening tariffs and unpredictable economic measures that alter business confidence from one day to the next.

Technological competition: The unexpected launch of DeepSeek with better computational efficiency than GPT-4 challenged the advantage of U.S. tech giants, causing massive rotations in portfolios.

Persistent inflation: Despite previous rate cuts, inflation continues to require Federal Reserve vigilance, and each statement can trigger extreme reactions.

Treasury yields: U.S. bonds with attractive rates compete with stocks for capital flow, affecting equity demand.

Technical analysis of the VIX today for 2025

Key resistance and support levels:

• Resistance between 20-22 points: a decisive break would signal prolonged volatility
• Support at 15-16 points: area where the market has repeatedly found stability

Technical indicators: The RSI hovers around 65 after January peaks, suggesting possible overbought conditions. The MACD remains positive but with converging lines, warning of an imminent trend change.

VIX futures ETFs: These products reflect futures prices, not the realized volatility of the S&P 500 directly, creating significant differences. The (50-day moving averages) indicate short-term strength, although momentum could weaken.

Possible scenarios for the VIX in 2025

Absent unexpected events, the most likely outlook is a gradual stabilization of the VIX toward 12-15 points, with occasional fluctuations in 18-20.

However, there are three alternative futures:

Optimistic scenario: Trade tensions resolve, inflation falls, and the Fed continues rate cuts. The VIX converges to historically low levels (10-12 points).

Neutral scenario: Present tensions but no escalation. The VIX fluctuates in the 15-20 range, reflecting contained uncertainty without widespread panic.

Pessimistic scenario: Escalation of tariffs, rebellious inflation, and rising rates. The VIX could revisit 30+ points, approaching 2020 readings.

Trading strategies with the VIX for 2025

For defensive investors: Buying VIX derivatives when markets fall acts as insurance. If your equity portfolio drops 10%, gains in bullish VIX positions can offset losses, leveraging the inverse correlation.

For speculative investors: Use VIX futures CFDs to bet on volatility spikes. During the pandemic, those who bought VIX derivatives gained triple-digit returns during the March 2020 collapse.

Entry timing: The VIX is better as a risk control tool than for pure prediction. Monitoring the 20-point level as a critical zone: breaking above decisively suggests selling pressure in stocks; falling below 15 indicates excessive complacency where micro-corrections can quickly amplify.

How to invest in the VIX today?

The VIX cannot be bought directly as a stock. Access is through:

VIX futures: Contracts settled in cash based on the index at expiration. Ideal for active traders with risk tolerance and access to professional platforms.

Volatility ETFs: Exchange-traded funds that replicate VIX futures strategies. More accessible than pure futures but with rebalancing costs that erode long-term returns.

VIX CFDs: Leveraged instruments allowing trading with minimal capital. Useful for short-term speculation but with extreme risk if the position moves against you.

Final reflection

The VIX remains what it has been since 1993: the best reflection of how the market perceives immediate risk. In 2025, with geopolitical tensions, political changes, and technological disruptions, ignoring the VIX is like flying without instruments.

It is not a perfect predictor, but its inverse correlation with the S&P 500 makes it an indispensable tool for both protection and speculation. The key is understanding that the VIX is a tool, not a passive investment asset. Used with discipline, it can enhance returns; used without a plan, it can destroy capital.

Stay alert to the 20-point level in 2025: it is the line that separates a complacent market from an alert one.