🚨I’ll be live at 3:30 p.m. ET with Nate🚨
Micron reports earnings after the close today and it will have a major impact on the market for the near term so we’ll cover that and more [tap to join us for Closing Playbook]!
Most traders think they understand volatility. They see the VIX spike above 20 and assume the market’s in trouble. They watch it drop back down and think everything’s fine.
But they’re looking at the wrong thing entirely.
The absolute VIX level doesn’t tell you what you actually need to know. What matters — what separates genuine directional movement from high‑volatility chop — is the day‑to‑day change in volatility. That change tells you whether the market has conviction or whether it’s searching for direction inside an uncertain regime.
What Directional Movement Actually Looks Like
When you’re moving directionally, your volatility generally isn’t very high. Traders expect big moves to create big volatility, but directional markets behave differently because they have consistency. Even when price is drifting lower, you don’t see the VIX jumping several points in a single day.
You might have elevated volatility where it’s above 20, but you won’t generally go from 15 to 20 or 16 to 22 in one session. Those smooth volatility profiles often appear when the market transitions cleanly from one regime to another.
What’s unusual lately is how messy these transitions have become. Instead of a clear pivot, the market spends days trapped in an uncertain regime, showing signals that break down before momentum forms.
In these environments, traders need to watch how volatility behaves relative to price. Directional trends hold steady. Choppy periods produce violent reversals in volatility, which brings us to the real danger.
The Chop Pattern That Destroys Accounts
Chop reveals itself through rapid, whipsawing changes in volatility. This is where the VIX spikes sharply, collapses just as fast, then spikes again. Those swings are your warning sign that the market lacks direction and that price is being driven by short‑term sentiment rather than sustained positioning.
Over the past five years, something new has amplified this behavior: 0DTE (zero-days-till-expiration) options. These contracts now dominate intraday flows and have fundamentally changed how the S&P 500 moves day to day.
When traders — retail and professional alike — pile into millions of these contracts, they create abrupt bursts of hedging pressure. That leads to sudden volatility shifts that would’ve been rare a decade ago.
Understanding this matters because volatility and trade range remain the strongest markers of regime change. When 0DTE flows are stacked around a specific strike, price often gravitates toward it.
Identifying where that concentration sits gives traders a measurable edge in timing entries and exits. Pairing that information with the velocity of VIX changes helps you decide whether to take directional setups, stay flat, or trade ranges.
The next time you’re analyzing market conditions, focus less on where the VIX is and more on how fast it’s moving. Combine that with awareness of 0DTE positioning and shifting sentiment.
Those patterns will tell you far more about whether your trades have room to run — or whether you’re about to step straight into chop.
Kane Shieh
Kane Shieh Trading
Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
Important Note: No one from The TradingPub team or Kane Shieh Trading will ever contact you directly on Telegram.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. The Bullseye Effect In the S&P 500 Is Changing Everything!
I recently went on camera with former hedge fund manager Roger Scott to expose a stunning discovery on the S&P 500…
Tipping off some of the most lucrative end-of-day trades market-wide!
Fair warning: You’re in for a stunner!
