Read How does the CBOEs VIX Index Work?" and answer the questions that follow.

a) Explain briefly how implied volatility is calculated on an option on an individual share of stock.

b) How is the calculation of the VIX similar and how is it different than the implied volatility on an individual share of stock?

c) Given that it is normal for volatility to increase in times of uncertainty, would you expect the VIX index to move in the same direction as the market (increasing as the S&P 500 increases) or in the opposite direction? According to the article how consistent is the relationship between the direction of the VIX index and the S&P 500 and does it matter if the S&P index is increasing or decreasing?

d) Over the next 30 to 60 days would you expect the VIX to increase or decrease? Explain in detail.