DEFINITIONS - VOLATILITY INDEXES

The VIX is one of the investment industries most widely accepted methods to gauge stock market volatility. The first version of this index was developed by the CBOE in 1993 and was calculated by taking the weighted average of the implied volatility for the Standard and Poor's 100 Index (OEX) calls and puts. However, in Sept 2003 they revised it to give a more accurate depiction of broad market volatility. In essence, the VIX is a gauge of investors' confidence or non-confidence in market conditions.It is important to understand that the VIX does not measure the volatility of a single issue or option instrument, but uses a wide range of strike prices of various calls and puts that are all based on the S&P 500. What is formed is a more accurate measure of the markets expectation of near-term volatility.

The VXN measures volatility on the Nazdaq 100 index, the VXO on the OEX 100 and the QQV measures volatility on the QQQQ Nazdaq 100 tracking stock.