VIX explained

Dan Deming explains the "fear index"-VIX in a clear and simple way at CBS2 Chicago Studio: The VIX is a forward looking indicator of expected market movement or volatility. Dan explains that there are several variables that can effect market volatility. Dan also expects the VIX index to drop to high 20s or middle 20s if the critical level 1045 of S&P500 holds.

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Trades ideas under high volatility

Brian Stutland, contributor to CNBC's Options Action shown on Fridays, recommends to take advantage of high premium of option when VIX is above 40. Specifically, he recommends selling naked puts such as July SPY 105 puts and use the proceeds to invest in treasury bond; or sold covered calls for QQQQ.
VIX only go above 45 around 10 times: Russian financial crisis, Long Term Capital Management fallout, 911 world trade center attacks, worldCom bankruptcy filling, lehman brothers collapse. Only in 2008 VIX continued to go higher to 80 and it is highly unlikely to sustain the 40s level.

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Dan talks about RUT and SPX formed the head and shoulder pattern which signals downside movement. Investors are anxious amid concern that Greece's debt crisis will spread through the region and rush to buy VIX upside calls. With SPX breaking down 1183 level, Dan will watch careful at 1168 level, the next supporting level. VIX reaches intraday high of 25.70 and closes at 23.84, up 18%.