1. Why the VIX may be Flawed
Despite its “Cult” Status, The VIX Index is flawed by Design, and The Results show it

2. Background of VIX Index
A measure of Volatility was needed after Black Monday, in 1987
Given a Name and Nickname (VIX comes from Name)
The Volatility Index (Official)
(The Fear Index) as Nickname
Underlying is /VX Futures
Does a terrible job in Official Role (0%)
A pretty bad job at Nickname (50% at best)
In fact, does dis-service devastating investors

3. Design Flaws in The VIX
The VIX Index came to Being in the early 1990’s.
Black Monday (’87) needed new Market Barometer
Official Role - as a “Volatility Index”
Developed a nick-name over time “The Fear Index”
The VIX is not Tradable, its OPTIONS AND FUTURES are
“Risk Horizon” is only 1.5 months. Call Options are Ignored
Without Calls, how can we even think of a “Volatility Index”
Options need an “Underlying”, The Futures /VX are picked
VIX and /VX are very different, moves may not overlap
This leads to Trader losses, due to lack of knowledge
VIX plays a small role in creating Losses in Flash Crashes
As a "Volatility Index” it falls Flat. Fear does a bit better

4. Role as a “Volatility Index”
The Volatility Index (Official)
Does a terrible job in Official Role (0%)
Zero Percent in its official Role
Well, let’s check the Facts
Core design does not consider Call Options
VIX value is based on SPX Puts demand
Calls increase due to Math Imbalance
Also Called Put Call Parity relationship
Arbitrage opportunities WILL be closed down

5. Record is Spotty as (A Fear Index)
Role as a “Fear Index”
Record is Spotty as (A Fear Index)
A pretty bad job at Nickname (50% at best)
“Risk Horizon” average is ONLY 1.5 months
What happens after 1.5 Months ?
Outlook non-existent, or Incorrect, Unacceptable
Instills FEAR for ALL the wrong reasons
At Best a 50% credit

6. Misleading in a few cases
The only Tool available to Retail Traders
At times plays a role that harms investors
Strange behaviors in Futures, Flash Crash etc
Average True Range better than VIX (Volatility)
And VIX of the VIX is unbelievable
Like Flash Crash day – May , 2010
Within 20 minutes, SPX crashed 100 points
And in 1 Hour recovered ALL OF IT BACK
Became A big Learning (Costly) for many