NEW YORK (TheStreet) -- On Wednesday the volatility index, known as the VIX, hit its highest levels since late 2011 during the eurozone crisis. 

But what exactly is the VIX?

The VIX, more formally known as CBOE Volatility Index I:VIX  and informally as the "fear index," is "a number which represents the implied volatility in the S&P 500," explained Tim Edwards, director of index investment strategy at S&P Dow Jones Indices. 

In other words, "a low VIX means that the market anticipates not much movement in the S&P 500," he said, whereas "a high VIX means that the market anticipates a large amount of movement, specifically over the next month." 

CBOE Volatility Index ^VIX data by YCharts

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The S&P 500 is on the verge of correcting some 10% since its peak in September. The rapid decline in the index is what drove the VIX up so quickly because it more than doubled in the past month when it briefly broke above 30 on Wednesday, Edwards explained. 

So can investors trade the VIX? He pointed out the VIX is more of a barometer for the future volatility of the S&P 500. It cannot be purchased outright, but more sophisticated investors can buy and sell futures and options contracts on the index. 

Also, select exchange-traded funds look to capture the movements of the index. He noted the ProShares Ultra VIX Short-Term Futures ETF (UVXY) - Get Report or the ProShares VIX Short-Term Futures ETF (VIXY) - Get Report .

-- Written by Bret Kenwell

Follow @BretKenwell