About the Show. Welcome to New Domino City Once the playground to legendary duelist Yugi Muto, this sprawling metropolis has since been transformed into a. These early episodes tell how five average teens turned into the Mighty Morphin Power Rangers, using their powers to fight the evil Rita Repulsa. Dark forces are tearing Hells Kitchen apart once again, but this time Daredevil may have to choose between the city and his friends. Includes a cast list, user comments, and plot outline. The creator of Wall Streets fear gauge says people dont understand it as well as they shouldBob Whaley is a professor of finance at Vanderbilt Universitys Owen Graduate School of Management. Courtesy Vanderbilt University One of Wall Streets most popular positions is betting that nothing will happen in the markets. Every day, traders across the US place bets that volatility will continue to decrease as stocks continue to climb higher and higher. And for the most part, theyve profited from those bets. 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This summer, the VIX reached a historic low of 9. Today, its hovering at about 1. Business Insider recently spoke with Bob Whaley, the Vanderbilt University finance professor who created the wildly popular index. Whaley, 6. 4, said he had been pleasantly surprised by the attention his index had received since its launch almost three decades ago. Heres what he had to say This interview has been lightly edited for length and clarity. Graham Rapier Tell me about your involvement in the creation of VIX. Fear-of-the-dark-16.png' alt='Fear(S) Of The Dark Streaming' title='Fear(S) Of The Dark Streaming' />Bob Whaley The idea of a volatility index comes from Gary Gastineau in the late 7. What he proposed and created was this volatility index based upon the volatilities of high market value stocks, and so the idea had been around for a while. In the early 9. 0s I had done some work for the CBOE around market volatilities. They were associated with the market crash of October 1. It was a pretty intense time. The CBOE enjoyed the work that I did for them and asked me to develop a volatility index for them, and thats what I did. I took all of their data, took a sabbatical from Duke, and headed off to France so the VIX was actually created by a Canadian in France using American data. They needed a company identifier, and they were so pleased with my work that they wanted to choose REW, my initials. But the American Exchange had the ticker symbol REW, and they refused to trade. So the guy I was working with at CBOE faxed me a list of potential symbols to be used for this volatility index, and I chose VIX. Film Noir Movies I Want A Dog For Christmas, Charlie Brown. After the fact, it would make more sense but I had an opportunity for fame and it went by the wayside. Rapier How do you explain VIX, and the trading products that are based on it, to an everyday personWhaley Technically speaking, it is the expected volatility of the S P 5. But the way I explain it is the price of insurance. If you were to own a house on the North Carolina coast or Florida coast and you hear the news of this hurricane coming, would you be willing to pay more for insurance And the answer to that is presumably so. In normal times, you may not be willing to pay as much. But when you know an event like that has a strong probability of occurring, what youll do is pay more for insurance. What happens is people want to buy more insurance, and the insurers are willing to sell it, but not at the same price. What theyll do is escalate their price because they have to be hedged in terms of their exposure. So during these times, like the hurricanes, people are willing to pay extremely more for insurance. The analogy is institutions or people may have a pension fund largely consisting of stocks, now what happens when they become frightened of a stock market crashThey can exit their position, but they can also buy index put options. Essentially those are the insurance policy. These put options provide you with insurance on your stock portfolio, so if the market dives, the value of these put options will go way up and you wont lose any money. Fear(S) Of The Dark Streaming' title='Fear(S) Of The Dark Streaming' />The reason its called the investor fear gauge is simply because its driven by the demand for S P 5. If institutions become frightened by certain geopolitical risks, what theyll do is rush in and buy a bunch of index puts. When they buy those, the VIX level will go up because its nothing more than a weighted average of the prices of those puts. Read More. Rapier How should people interpret current VIX levels Whaley When you see VIX go up, you can know there are a bunch of people out there that are buying insurance on the stock market because theyre anxious about something. When VIX goes down, its just recognition that people arent too worried. The average closing level is 1. If its 1. 1 now, that means people arent particularly concerned. At the same time, its level was 9 a couple weeks ago, so theres clearly more anxiety now than there was a few weeks ago, but relative to its entire history its just not that big a deal. Rapier What do you make of all this attention its getting latelyWhaley I dont think people understand it as well as they should. The VIX doesnt trade. Its just a number produced from these 2. S P 5. 00 option prices. But what does trade are the VIX futures and the VIX options, which are related to VIX but in a strange way. Where VIX is the volatility over the next 3. VIX futures is the expectation of the volatility 3. Those two series dont behave like one another, in fact quite differently. VXX is incredibly actively traded. Would I have thought it would be this actively traded No, but it is. I think the VIX futures index is particularly staggering. It probably trades more shares in a day than Microsoft. If you look at the turnover ratio, youll find that its a huge number. If people were just buying and holding, that number would be much lower. Rapier What kinds of investors are trading these instrumentsAre they doing it in a smart way Whaley If you look at VXX and go to 1. F filings, youll see its largely an instrument used by retail customers, not institutions. If you go over to the ownership of XIV, its largely institutions that know that this thing will go downward through time. It only goes down a few cents a day, but if you get a volatility spike, youll lose money, but youre not going to get that many spikes if you have a long term investment. In fact, if you go to the prospectus of these things, it explicitly states that if you buy and hold these things, youre assured to lose most if not all of your investment. But people do still buy and hold, and its largely retail customers. Because how many retail customers look at a prospectus Those things are 3. They dont do that. The issue I have is if youre a sophisticated investor, like an institution, they know exactly whats going on. Retail customers dont. Rapier Do you trade any VIX linked products yourself Whaley Yes I do. I buy long term put options on VXX, because I know VXX is going to go down through time. There may be days where theres a spike in volatility, but I dont care because these options have three years to maturity, so I just let their prices go up as VXX goes down. Its worked pretty well. Markets Insider NOW WATCH THE BOTTOM LINE Gary Shilling on expensive stocks and Alibaba vs. Amazon. More From Business Insider.