Look, I know the VIX might seem like the magic potion for trading volatile markets. But trust me, trying to trade the VIX is like chasing shadows.
When you buy puts on the VIX, you end up losing more than you gain because, unlike a regular stock, the VIX tends to drop its value right when you’re hoping for a move.
And don’t even get me started on VIX call options — once they go in the money, they can actually fall below the spot value, making your whole play a no-go.
The VIX: A No-Go
Here’s the bottom line: The VIX isn’t built like a normal equity. It’s derived from volatility futures, so its option prices react differently when markets calm down.
Instead of a smooth run that you’d hope for in a stock trade, this volatility tool can rip you off when the market settles. It’s one thing to trade something straightforward and another to worry about all these moving parts that don’t make any intuitive sense.
Try This Instead
If you’re looking to hedge your exposure—especially when the market starts acting up — focus on something more predictable. For example, consider using an inverse Nasdaq option like the ProShares UltraPro Short QQQ (SQQQ).
This strategy gives you a clearer play on a market pullback. When the Nasdaq retreats — and we all know what happens to high-flying Technology (XLK) stocks when that runs — SQQQ can act as a more intuitive hedge. You set up a call spread or other strategies with SQQQ and keep your eye on a move that’s easier to track.
I mean, why wrestle with an instrument that’s built for chaos when you can rely on something with more straightforward liquidity and movement? The VIX might look interesting on paper, but in practice, its quirks make it a risky bet.
Instead of trying to outsmart a tool that’s designed to be unpredictable, use a hedging strategy that lines up better with how the market actually moves.
Bottom line: Don’t waste your time and capital on structures that aren’t doing you any favors. Instead, keep your hedges simple. When drilling into a down market, focus on trading tools that reflect the underlying moves you’re watching every day.
Trust this approach and you’ll be in a much better spot when the market decides to turn.
Order Flow:
Oracle (ORCL) reports after the close today and we saw a pretty sizable short bet just shy of $550k in the weekly expiration, $137 strike puts.
Puts are often hedges against a long stock position should it tank on earnings. However, this is inside the market makers’ expected move of $13.47 higher or lower.
ORCL is all the way back at its early September prices of $147 a share.
Seeing lots of put buying in crypto names like MicroStrategy (MSTR). If MSTR keeps selling off like this, down over 16% today, we could start seeing margin calls in the crypto names.
And if that happens… look out below! We could quickly see 10-20% drops from here.
*This is for informational and educational purposes only. These are not official alerts issued by Lance, but rather some interesting orders picked by the team at Lance Ippolito Trading.
There is inherent risk in trading. Trade at your own risk.
Note: If no date is listed after the month, it’s the monthly expiration (third Friday).
The team at Lance Ippolito Trading
Lance doesn’t want the CCP spying on him, so you’ll never find him on TikTok. Same goes for other social media sites, which are filled with impersonators, scammers and crypto bros.
You can only find him on his personal YouTube Channel — smash that Subscribe button! https://www.youtube.com/@LanceIppolito
And in his private Telegram channel: https://t.me/+-gVwEIwGJhplMTgx
Important Note: No one from The TradingPub team or any of its associated brands 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. Trading Expert Reveals His Unusual Play on Dirt-Cheap Options
Without using technicals, trends or patterns, I’ve been able to target 2X moves on dirt-cheap options almost overnight.
And now it’s your turn!
