The VIX, which is more formally known as the CBOE Volatility Index, is a measure of implied volatility on S&P 500 index options. It is one of the main indicators used to gauge the volatility in the markets and is also known as a fear index due to its propensity to spike as the result of geopolitical events.
When a bull market is marching along with consistent up days, the VIX will often find itself in the 10-20 range. But a single event, such as major geopolitical event, can send the VIX skyrocketing.
We decided to take a look at the five biggest jumps (by percentage) the VIX has recorded since 1990.
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As can be seen in the above chart, the record for the largest percentage jump in the VIX in a single session occurred on February 27, 2007, which also coincided with a 3.5% drop in the S&P 500. The force behind this big move was issues in China including a big drop in stocks in the Chinese markets and the Chinese government raising interest rates to reduce speculations in the market.