Just How Volatile Is Oil? CBOE Unveils Oil Vix

The Vix isn't just for the stock market anymore.

The Chicago Board Options Exchange's Volatility Index, a closely watched measure of fear in stock trading, is now being extended to other parts of the market, with the launch of the first new component Monday.

The oil Vix, or OVX, will gauge the level of volatility in the West Texas Intermediate light, sweet crude trade. The OVX will measure the market's expectations of 30-day volatility in crude pricing by using the methodology employed with the standard Vix and is available on the CBOE Web site.

To provide perspective on the methodology, the CBOE has traced the oil Vix back to May 10, 2007 when it would have registered a 27.36, which would be below the 30 level that analysts associate with high volatility. The price of oil then was about $61 a barrel.

On Tuesday, with oil closing at more than $138 a barrel, the OVX registered at 50.89.

While it did not release a specific timetable, the CBOE says it plans on introducing volatility indexes for commodities and currencies in the coming months.