AS WITH ALL THINGS, THE BEST VIX PLAY INVOLVES PATIENCE
As you can see by the chart below, VIX sub-12 doesn't happen very often, and while I know that folks like to play the VIX in the +12 to infinity no man's land (myself, on occasion, included, see post below), I think the better bet is to wait for sub-12 VIX and then play this index via debit spread (e.g., 10/11.5, 10/12, 10.5/12 call spread) where you know your risk up front, taking between 25% and 50% max profit when that occurs and then running since VIX can rapidly cave, leaving you to hold the bag ... .
Point in fact, I don't trade the VIX or VIX-related products as a general matter, since the vast majority of my positions are already "hedged" with a short call side matched with an oppositional short put side. Moreover, as a premium seller, I am already trading or selling volatility.
What VIX and long VIX-related products were originally designed to do was to hedge long equity positions in the event of a market downturn, but they have morphed into an instrument that traders are attracted to due to the price swings these products experience over short time frames ... . The reason why I primarily look at VIX on a daily basis is as an indicator of broader market volatility and, as such, as a sign of whether to enter a premium selling play in a broader market index or index ETF, such as SPX, RUT, SPY, IWM, etc. rather than as a possible options play in itself. But, then again, if I'm going to be watching the thing on a daily basis anyways, why not try to get a trade out of it ... .
Point in fact, I don't trade the VIX or VIX-related products as a general matter, since the vast majority of my positions are already "hedged" with a short call side matched with an oppositional short put side. Moreover, as a premium seller, I am already trading or selling volatility.
What VIX and long VIX-related products were originally designed to do was to hedge long equity positions in the event of a market downturn, but they have morphed into an instrument that traders are attracted to due to the price swings these products experience over short time frames ... . The reason why I primarily look at VIX on a daily basis is as an indicator of broader market volatility and, as such, as a sign of whether to enter a premium selling play in a broader market index or index ETF, such as SPX, RUT, SPY, IWM, etc. rather than as a possible options play in itself. But, then again, if I'm going to be watching the thing on a daily basis anyways, why not try to get a trade out of it ... .
