||Since its first introduction in 1993, the Chicago Board Option Exchange's (CBOE's) Market Volatility Index, the VIX, has become more and more popular among traders and investors in the market. If used correctly, not only is the VIX able to provide traders with useful information to evaluate the market but also serve as a hedging instrument to lower the risks to investors, especially in the contemporary lowinterest rate environment. Therefore, it is essential to have a thorough understanding of this index to fully take advantage of its usefulness and avoid misinterpretation. The purpose of this paper is fourfold: First, to provide an overview of the VIX, its evolution, and its relation with the stock market by statistical analysis. Second, to illustrate some typical financial products using this volatility index as the underlying assets and their related hedging strategies. Third, to demonstrate its effects on portfolio diversification. Fourth, to show the application of the VIX to corporate finance.