When the market gets volatile, options traders either make a killing or get completely wiped out. There’s rarely an in-between.
If you don’t know what you’re doing, you’ll end up on the wrong side of a trade — and the losses pile up fast.
The key to surviving wild markets isn’t avoiding options altogether. It’s knowing how to use them the right way when the VIX spikes and fear takes over.
Why Volatility Can Destroy Your Trade
Most traders think options are a simple bet on direction — but volatility plays an even bigger role. When the market gets choppy, options premiums explode. That means if you’re buying options, you’re probably overpaying.
And if the volatility spike fades, even if you picked the right direction, you can still lose money as premiums deflate.
That’s why blindly buying calls or puts during a market panic is a terrible idea. You’re paying peak prices for an instrument that will lose value if the chaos dies down.
The Right Way to Trade Options in Volatile Markets
If you want to profit from volatility, you need to flip your approach. Instead of buying options, look at selling premium. Strategies like credit spreads, iron condors, and straddles can take advantage of high implied volatility — letting you collect inflated premiums rather than paying them.
For example, when the VIX spikes, selling a put credit spread on a stock like Nvidia (NVDA) or Apple (AAPL) allows you to profit as long as the stock stays above your lower strike price. You’re not betting on a massive rally — you’re just taking advantage of inflated option prices and letting time decay work in your favor.
Another smart play? Sell covered calls against stocks you already own. If you’re holding shares of Microsoft (MSFT) or Amazon (AMZN), a high-volatility environment means you can collect more premium on those calls. Worst case? You get assigned and sell your stock at a higher price.
The bottom line: Volatility isn’t your enemy — unless you trade it the wrong way. Buying options during a market panic is a rookie mistake. If you want to trade options safely when the market gets wild, focus on selling premium, managing risk, and letting inflated volatility work for you, not against you.
Kane Shieh
Kane Shieh Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. See the Ticker That Could Deliver the Next Weekend Win
After landing FOUR weekend wins during a volatile February…
I’m aiming for this feat again in March — even as tensions creep into the market.
