Trade the news BEFORE it hits the headlines — LIVE at 4 p.m. ET with Chris and Kane
The VIX — aka the “fear gauge” — has been all over the place lately, but that’s nothing new.
What’s more important is understanding the pattern we’ve been seeing — every time the VIX spikes to 20 it pulls right back down. That’s happened four or five times now, and it’s a signal traders need to pay attention to.
A score of 20 on the VIX means average volatility — a 1% move up or down in a given day.
Lately, when the VIX has breached 20, it’s only been an intraday move before settling lower. Most of the time, it falls all the way back to 15, but with the current uncertainty around tariffs and the economy, we may only see a drop to 16 or 17 before it bounces again.
The bigger point here is that volatility itself is stuck in a range — just like the S&P 500.
This kind of environment can mess with traders.
When the VIX spikes, fear kicks in and people start selling. Then, when it drops, complacency takes over. But what’s really happening is that volatility is just as predictable as price action.
The VIX is moving up and down in a wide range, just like the broader market, and understanding that can keep you from overreacting.
If we get another spike to 20, odds are high that we’ll see it come back down again. But that doesn’t mean it’s time to short volatility aggressively.
As long as uncertainty lingers — whether from trade negotiations, earnings or economic data — these VIX spikes will keep happening. That means you can’t get caught off guard when the next one comes.
In markets like this, the best approach is to structure trades that can handle big swings. Spreads, straddles and well-placed hedges can help smooth out the ride.
But the real key is to recognize that volatility is part of the game. Instead of getting shaken out every time the VIX jumps, use those moves to your advantage. When fear spikes, look for opportunities. When complacency sets in, stay cautious.
The VIX is telling us one thing loud and clear — this market isn’t calming down anytime soon. So trade accordingly.
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. TODAY 4 PM ET: Trade News BEFORE It Hits the Headlines
Former hedge fund manager Chris Pulver and I are going live to reveal a breakthrough method for spotting what could be market-moving news — before it hits the mainstream media.
While other traders wait for headlines to drop, learn how to spot potential market movers before the news breaks at today’s live special event at 4 p.m. ET!
