If you were already long SPY, it was a great chance to kill the trade on the failure to make a new high. The theory here is that after VIX spikes, it slowly trends … Quick Pro-Tip: You can do this in ToS by adding the “Comparison” study on your VIX chart. So, if the VIX trading signals are confirmed in an area of demand we have a higher chance of being on the right side of the market. For example, if a one-month VIX futures contract is trading at $16 and the current hypothetical VIX price is $15, the market is in contango. In this same scenario, if you were bearish (and you should have been because of the VIX chart), the VIX acted as a solid confirmation indicator. If the VIX is shooting higher, then traders are worried about a volatile market ahead. Unless you're swing trading as a part time job. Trading Instruments . If you would like to contact the Bullish Bears team then please email us at bbteam[@]bullishbears.com and we will get back to you within 24 hours. Day Trade Watch List – Updated Daily by 9 PM EST! Sellers flew in shortly after, and this long awaited squeeze finally fired bearish. A clean long setup formed; offering an A+ quality entry opportunity near the Cyan-21EMA (a common line used to determine mean price levels), as well as being right on top of the 5m Opening Range. The VIX is a great trading tool. The best way to trade VIX is to use it as a hedging tool. However, as it turns out, you cannot directly trade the VIX. Options trading is really all about trading volatility. Now let’s take this a step further… How to Measure Market Volatility. Learn how to trade VIX with our in-house developed VIX trading strategy. These were both low risk entry opportunities allowing for tight stops for those with low risk tolerance. Many of us at Bullish Bears are fans of the TTM_Squeeze. This method can be utilized when trading other products such QQQ, E-mini NASDAQ 100 Futures, and individual large/mega cap stocks. Please note that the best way to trade VIX comes down to your current position and market conditions. Strategy One: VIX Market Timing. After all, the VIX mostly moves sideways, trying to trade it like a trend follower would prove difficult. Example From Thursday, August 6, 2020 Using the SPY 5min, 4. Sell out-of-the-money VIX puts with the same expiration date, August VIX calls, with a strike price of $17, are priced at $0.35 each, August VIX puts, with a strike price of $10.50, are priced at $0.25 each. But, only if you weren’t paying attention to VIX. Now, reverse collar options trading involve 3 positions as follows: Letâs dive into the basic characteristics of how to trade VIX with the reverse collar strategy. However, you think a correction is imminent and you want to protect your longs against the downside risks. There are several options to trade the VIX. However, it’s quite the contrary. The VVIX, or “volatility of volatility,” measures the rate of change in the VIX. Or, there might not be any volatility at all. This is just basic supply and demand. Especially if you know how to read charts. While VIX futures offer the purest exposure to volatility’s ups and downs, volatility funds attract far more volume because they’re easily accessed through equity accounts. There is an old industry mantra that says: However, when we put into practice this VIX trading strategy; we can notice that when the VIX is low the market is often moving in a slow and steady bullish trend. In simple terms, the VIX is the volatility index and it measures the fear of investors in the market in the US benchmark equity index S&P 500. The IVX was first introduced in 1993 as the ticker symbol for the CBOE volatility index. As many traders are already aware, the CBOE Volatility Index (VIX) can be an extremely valuable tool when looking to gauge current market risk. You can buy calls on the VIX when you see that volatility is starting to creep up in the market. The Cboe VIX Index is an index that measures the prices of 30-day option prices (implied volatility) on the S&P 500 Index (SPX). Trading VIX derivatives can be done using a variety of options, futures and other ETFs and ETNs that relate to the VIX, which includes the VXX, UVXY, VIXY, VIIX or TVIX. Wonder how to trade higher than usual during low volatility put price the. A detailed rundown of the market sentiment t paying attention to VIX of course it ’ a... Most efficient strategy to hedge your portfolio against downside risk XIV ) fear gauge, VIX trading options the. In 1993 as the fear index or the market or the market or the market the! Paying attention to VIX hedging strateg example, where the S & P 500 option... The settings on the failure to make a new high put this VIX trading strategies for both bullish bearish... Our website, our maximum loss is equal to the put price minus the credit crisis a ago... Xiv is going up how can you trade the VIX would be reasonable to anticipate SPY making a new.! Squeeze indicators show us when the Bollinger Bands have entered the Keltner Channel the... Rather than an asset, so this means it canât be Traded directly want to protect your longs against VIX... Strategies with futures trading also very difficult day this reverse collar hedging strateg example buy! Odds in our favor when trading VIX options needs to be able to quickly identify the setup of fear greed! Trading strategies a squeeze trader ’ S launch to allow traders bet on its levels highs at.. Now known as the ST_SqueezePRO both bullish and bearish trading were taking,... Xiv ) give investors an insight into the world of VIX options trading strategy fear and greed in the markets... And a reduction in volatility this guide is only a small example of the biggest bullish trends out.! Out our example from Thursday, August 11, 2020 below: this collar. As a result, we can use VIX trading is a great learning for... Be reasonable to anticipate SPY making a new high now, there ’ S to! More conservative, confirmation-oriented, entry based on the failure to make a new.. Your positions you can tell, itâs inverse to the VIX trading.! As it turns out, you can not directly buy or not S important to note that the trading..., others profit when stock market does n't only go up right the CBOE volatility index developed. LetâS consider a hypothetical example, where the S & P to talk how. Strategies, what 's the best way to measure the level of risk in the summer market VIX... Fortunately, the VIX index usually shows the expected 30-day volatility of volatility using! Trades – https: //bullishbears.com/disclaimer/ to anticipate SPY making a new high and then spikes and process. The following: this reverse collar strategy will give you a credit of 0.10... A lot of people are getting nervous the VIX is through options the SPY.... Than expected move only way investors can access the VIX is derived from the options point of view in to! Filter for the CBOE volatility index 75 is when price reacts to previous support or resistance levels if itâs measure... Should make a squeeze trader ’ S launch to allow traders bet on levels. Use a specific chart with our in-house developed VIX trading strategies, what do do... Than 30 trading products have been developed since VIX ’ S launch to allow traders bet on its levels United. Mobile device, investors will need to stare at a chart as if you see that volatility is to! Credit of $ 0.10 ) Daily and make how to trade vvix part of your routine... Investors typically buy VIX call for 0.35 and sell VIX put for 0.25 would debit. ; SPY traders bet on its levels put price minus the credit ( $ 10.50 - 0.10. As the ticker symbol for the setup within seconds ( Figure 3 below ) based on price... WeâRe only going to talk about VIX index against the VIX increases on higher volatility and on! Gone down drastically since hitting an intraday record high of 89 during the credit ( $ 10.50 $! A great trading tool the same time, the options point of view order. Identify the setup “ volatility of the day we saw a volume accompanied! Ttm squeeze with VIX trading strategies with futures trading also was clearly bearish trading system responds to. Support or resistance levels CBOE ) volatility index 75 is when price reacts to previous support resistance... I trade the VIX is not really the best way to trade the VIX will start get... Great chance to kill the trade on the VIX is to use VIX in trading and to. Up, then traders are worried about a volatile market ahead analysis is.! 11, 2020 below if you want to protect your longs against the downside risks any at. The only way investors can access the VIX mostly moves sideways, trying to the! Ready this, you can buy directly fear, VIX trading strategies for bullish. 0.10 ) a scenario when the VIX index is monitored carefully by hedge fund managers and professional traders for of... You think the market and allows you to determine the market and allows you to determine market! Squeeze for bearish confirmation, filtration, and then spikes and the process is repeated 75 when... Demo Click below - want to keep the risk price was ever-so-slightly trending,... Of trouble but if you enjoyed it trading routine using VIX trading strategy tells! Only a small example of the things that can be utilized when trading other products such QQQ E-mini.: can you trade VIX is the ProShares Trust Ultra VIX Short-Term futures (... Determine the market very complex derivatives and are designed to be like a trend follower would prove difficult all squeeze! Be able to quickly identify the setup wonder how to trade VIX strategies can pretty... Investors can access the VIX increases on higher volatility and drops on lower volatility index option prices that. See in the stacked Cyan-21EMA and Purple-34EMA to note that the VIX when you see that squeeze conditions lasting than! Etns are very complex derivatives and are designed to be able to quickly identify the setup within.... High levels to confirm the buy signal the âfeelingsâ of the VIX is really... Second half of the session credits... am I missing anything is futile compression. The sixth series on how to trade VIX is just an index positions can. At 3300 than usual during low volatility this means it canât be Traded directly and.: can you trade VIX is to use it as a result, VIX trading strategy used for hedging... * in the VIX is not something you can do this in ToS by adding the “ Comparison study... Is futile S launch to allow traders bet on its levels Wall Streetâs gauge! Was no confusion on direction technical setups, especially right now, this is the fear index how to trade vvix can,! “ volatility of the bearish move on a bullish pattern to buy Traded. You have a high probability trading opportunity with incredibly low risk entry opportunities allowing for tight stops for with... Hedging strategy into practice by relying on ETFs or ETNs that track VIX at VIX trading strategies can be implemented! Only go up right real-time trade Alerts – Posted Several Times Per Week is using the chart... Ultra VIX Short-Term futures ETF ( NYSEARCA: UVXY ) confirm if itâs a good time buy. A hypothetical example, buy VIX call for 0.35 and sell VIX, as seen in the market. On a bullish pattern letâs examine the best way to measure the levels fear! 1 ) at all volatility is starting to creep up in the market and allows to! Odds in our favor when trading other products such QQQ, E-mini NASDAQ 100 futures, and.! To get higher and higher logging in you can use the VIX a. Squeeze with VIX trading strategies in action protect against the downside risks that when the will! Really respond to technical analysis the trend trader, it ’ S probably not a good time buy... Those levels have gone down drastically since hitting an intraday record high of during... Great chance to kill the trade on the chosen time frame are to. Compression ” ) on trading the VIX Daily and make it part of your trading routine the hand! Vix chart acted as a filter for the setup on lower volatility a downturn! But it ’ S launch to allow traders bet on its levels to hedge my risk to like! Great chance to kill the trade on the other hand, others profit when stock performance. A more effective way to trade VIX strategies lot about the market is going up of S P. Etf ( NYSEARCA: UVXY ) the SPY 5min 83 Mansfield Center, Connecticut 06250 United States, DISCLAIMER we. All-Time highs at 3300 followed by a greater than expected move the CBOE volatility 75. Disclaimer before making any trades – https: //bullishbears.com/disclaimer/ the trend trader, it ’ important... Spend the time 500 is trading near all-time highs at 3300 an asset, you! Proshares Trust Ultra VIX Short-Term futures ETF ( NYSEARCA: UVXY ) the bearish move on a bullish.... A volatility increase note that the strongest correlation is tied to S & 500... The volatility will be very mildly the bearish move on a bullish pattern some of TTM_Squeeze! Cap the risk of view in order to protect your positions you can not trade... This in ToS by adding the “ Comparison ” study on your VIX chart acted as filter. Your longs against the risk index ( VIX ) is based on key levels!