Volatility index forecast: Third-party VIX price target

The Volatility Index (VIX) is the main benchmark for expected 30-day volatility in the US 500, often referred to as the market’s ‘fear gauge’.

As interest rates, earnings releases, and geopolitical risks continue to influence sentiment, what’s next for the VIX? This guide reviews third-party analysts’ Volatility Index forecasts for 2025 and beyond, including technical indicators and market positioning.

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Current Volatility index price and market position

The CBOE Volatility Index (VIX) is a real-time measure of expected 30-day volatility in the US 500, calculated from options prices. Often described as the market’s ‘fear gauge’, the index has historically risen during periods of risk aversion and declined when conditions are more stable. While it’s not directly investable, the Volatility Index underpins a wide range of derivatives and products – including futures, options, ETFs, and CFDs.*

The VIX can reflect resilient US equity performance, offset by ongoing uncertainty over Federal Reserve policy, recession risks and geopolitical developments.

*CFDs are traded on margin, which can amplify both potential gains and losses.

Past performance is not a reliable indicator of future results.

Volatility index forecast for 2025 and beyond

Third-party forecasts for the VIX suggested muted levels in the coming years (data from 5 September 2025).

Wallet Investor projected VIX futures to average between 12.7 and 9.9 into late 2025. Its October estimate stood at 11.5, falling to 9.9 by December. Looking further ahead, the service indicated that values could continue drifting lower in 2026-2027, from around 11.6 in early 2026 to below 6.5 by late 2027.

On the technical side, TradingView’s daily indicators showed a consensus ‘sell’ signal for the VIX on 5 September, with 16 ‘sell’, seven ‘neutral’ and two ‘buy’.

VIX price predictions: Analyst outlook

As of 5 September 2025, bank and market analysts pointed to a relatively calm outlook for equity volatility, though with risks that could shift sentiment quickly. J.P. Morgan Research noted that global equity volatility had largely normalised after the April tariff shock, with US volatility expected to decline moderately. The bank projected the VIX to stabilise around a 17–18 median level, supported by strong corporate earnings and systematic inflows, while acknowledging that slowing growth and persistent inflation could still test resilience.

Morgan Stanley highlighted the late-cycle backdrop as a key influence on volatility. Its strategists argued that equities had priced in a meaningful slowdown but not a potential labour market downturn. They stressed that earnings revisions and employment data remain decisive in shaping volatility, and suggested that range-bound trading would likely persist until a clear macroeconomic shift emerges.

Sentiment and positioning were also central to the outlook. According to Fortune, hedge funds and large speculators have held some of the largest net short positions in VIX futures in three years. This indicated confidence that low volatility will continue, but also raised the risk of a sharp squeeze if economic data or Federal Reserve policy decisions diverge from expectations. Fortune suggested a possibility that September’s seasonal weakness in equities, alongside jobs and inflation releases, could act as catalysts.

Vanguard observed that the US equity market continues to trade above the upper end of its fair-value range, limiting scope for further compression in volatility. Its return forecasts for US equities were revised lower, citing elevated valuations and the higher-for-longer rate environment as factors that may cap upside while keeping volatility relatively contained.

Past performance is not a reliable indicator of future results. Analyst projections may be inaccurate, rely on assumptions, and should not replace independent research.

What could influence the Volatility index price?

The VIX can move in response to several factors linked to both market-specific and broader economic conditions.

Seasonal market patterns

September has often been associated with weaker average returns, sometimes referred to as the ‘September effect’. If equity markets face selling pressure during this period, the VIX could rise sharply. However, stronger investor sentiment may reduce any seasonal impact.

Federal Reserve policy

Uncertainty over interest rate decisions or shifts in monetary policy typically lifts volatility expectations. By contrast, clearer signals or confirmation of a steady policy path from the Fed can reduce VIX levels.

Economic indicators

Mixed growth data – such as strong employment figures alongside weaker consumer activity – may push volatility higher. In contrast, steady momentum without signs of recession could reduce demand for hedging and weigh on the VIX.

Geopolitical and trade risks

Events such as trade disputes or geopolitical tensions can unsettle markets and drive the VIX higher. A resolution or easing of risks would likely reduce expectations for future volatility.

Equity market performance

Sharp declines in the US 500 or US Tech 100 may cause the VIX to spike. Sustained rallies with limited selling pressure tend to suppress volatility and push the index lower.

Institutional positioning

Activity in VIX derivatives – particularly increased demand for call options – may reflect hedging strategies that add upward pressure. Such positioning is often forward-looking and may anticipate volatility. If these positions unwind, the VIX may retrace.

Unexpected events

Geopolitical shocks, surprise economic data or weaker-than-expected corporate earnings can all trigger rapid moves in the VIX. While the index may initially react gradually, it can respond sharply once risks materialise. In calmer periods without such catalysts, volatility expectations are likely to remain subdued.

VIX CFD trading strategies to consider

Trading VIX CFDs can be approached in several ways, depending on outlook and time horizon. It’s important to note that CFDs on the VIX typically track VIX futures rather than the index itself, which is not directly tradable. Applying sound risk management and using platform tools – such as stop-loss* and take-profit orders – can help manage exposure when trading index CFDs.

Here are some common approaches to VIX CFD trading:

• Day trading: focuses on short-term price moves in VIX futures or related products, often in response to data releases, Federal Reserve commentary, or sudden shifts in market sentiment.
   
• Swing trading: aims to capture medium-term changes in volatility, with trades held for several days to a few weeks to reflect shifts in sentiment or positioning.
   
• Trend trading: this approach seeks to follow broader market direction, using indicators and longer-term charts to guide entries and exits.
   
• Position trading: position traders hold CFDs for weeks or months, aiming to align with longer-term market trends.

*Stop-loss orders aren’t guaranteed and may be affected by slippage. Guaranteed stop loss orders entail a fee if triggered.

Discover more on our CFD trading strategies page.

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