The Volatility Index (often referred to as the VIX) measures market expectations of future volatility based on options prices of the S&P 500 index. It reflects investor sentiment and is often called the "fear gauge," as higher values indicate increased uncertainty or risk in the market. Traders and investors use the VIX to assess market conditions and make informed decisions. A rising VIX typically suggests that investors expect significant price fluctuations, while a lower VIX indicates a more stable market environment. Understanding the VIX can help in managing investment strategies and risk exposure.