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The Fear & Greed Index is a way to gauge stock market movements and whether stocks are fairly priced. The theory is based on the logic that excessive fear tends to drive down share prices, and too much greed tends to have the opposite effect.

The Fear & Greed Index is a compilation of seven different indicators that measure some aspect of stock market behavior. They are market momentum, stock price strength, stock price breadth, put and call options, junk bond demand, market volatility, and safe haven demand. The index tracks how much these individual indicators deviate from their averages compared to how much they normally diverge. The index gives each indicator equal weighting in calculating a score from 0 to 100, with 100 representing maximum greediness and 0 signaling maximum fear.

Every component and the Index are calculated as soon as new data becomes available.

The Fear & Greed Index is used to gauge the mood of the market. Many investors are emotional and reactionary, and fear and greed sentiment indicators can alert investors to their own emotions and biases that can influence their decisions. When combined with fundamentals and other analytical tools, the Index can be a helpful way to assess market sentiment.

The VIX (CBOE Volatility Index) measures expected volatility of the S&P 500 over the next 30 days, calculated from option prices. Often called the "Fear Index", it rises when investors expect turbulence.

VIX above 20 signals nervous markets. Above 30 indicates stress mode. Use it as a risk gauge — high VIX may warrant defensive positions, while very low VIX could signal complacency before corrections.