The VIX Is In... Or Not?

May 1, 2025

Congratulations to you, dear reader. You’ve maneuvered your way through April 2025. I know only four of our twelve months have exactly 30 days, but this April sure felt a heck of a lot longer to me.

From “Liberation Day” on April 2nd to the pausing (er, reduction?) of tariffs on April 8th, the major indices decreased by double digits (DJIA: -10.8%; S&P 500: -12.1%; NASDAQ: -13.3%). However, all three recovered virtually all of their losses by the end of the month.

Short-term volatility is a concept we frequently discuss when it comes to investing, and it really managed to stress test us in April. So how common is this? How is volatility measured? Where do we go from here?

In 1993, the Chicago Board Options Exchange (CBOE) introduced their volatility index (VIX), which is a popular measure of the stock market’s expectation of volatility based on S&P 500 index options over the next 30 days. It is commonly (and not so lovingly) referred to as the fear gauge.

Generally speaking, when the VIX is lower than 20, this indicates stability and even optimism in the markets. Between 20-30, there is mild to elevated volatility. Once we venture beyond 30, this signals that the market is highly volatile.

When we dig into the data, there’s some fascinating nuggets:

• The top 69 highest VIX closing numbers on record occurred during only two periods: the great financial crisis when major banks were failing (October 2008 - March 2009) and the COVID-19 pandemic when the world shut down (March - April 2020). Those values range from 82.69 to 52.37.
• The highest close outside of these two time periods was April 8th, 2025 at 52.33.
• Friday, April 4th, 2025 was the sixth largest VIX spike from one day to the next (+15.29) — from 30.02 to 45.31.

When volatility has been extreme and times feel bleak, our human instinct is to retreat to what we perceive to be safety — removing assets from the stock market to stem losses or reduce our contributions. Historically, those have both been behavioral errors. What’s happened to the S&P 500 after the VIX peaks? Let’s examine two examples:

March 16th, 2020

• 82.69 — Peak VIX closing value (Highest all-time)
• +133.40% — S&P 500 return (03/16/20 – 04/30/2025)

November 20th, 2008

• 80.86 — Peak VIX closing value (2nd highest all-time)
• +640.17% — S&P 500 return (11/20/2008 – 04/30/2025)

What’s to come? Are we in store for more volatility in the near-term? Who knows. As of market close on April 30th, the VIX is sitting at 25.11. Investors typically don’t love the idea of uncertainty, which is exactly what they face with the recent “tariff on, tariff off” whiplash. There will always be countless variables outside of our control when it comes to investing.

What I do know is that we should continue focusing on what we can control: mainly that we’re comfortable with our asset allocation, funneling excess money into our investment accounts (if applicable), and keeping a level-headed demeanor.

Remember — In those times of uncertainty, your advisor can help you navigate away from self-sabotaging impulses. Being saved from one poor behavioral decision can be worth many years of advisory fees paid.

- Chris McKeown

1. https://www.macroption.com/vix-all-time-high/#vix-all-time-lows
2. https://www.cboe.com/tradable_products/vix/vix_historical_data/
3. https://www.britannica.com/money/cboe-volatility-index