Market Insider

The 'fear index' is telling markets more right now than stocks are

Wall Street's fear index surges

A surge in the so-called "fear index" that accelerated Tuesday — coupled with a relatively less severe selloff in stocks — gave traders a taste of just how much the broader market is unprepared for the U.S. presidential election and other events.

The CBOE Volatility Index (.VIX), considered the best gauge of fear in the market, has climbed more than 40 percent over the last six days, while the S&P 500 has lost less than 2 percent in that time. That indicates more volatility could come.

"The pricing of the (volatility) options is based on what is perceived as greater risk in the next week or two than what the market is currently realizing," said Daniel Deming, managing director at KKM Financial.