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The market’s been handing us some serious whiplash lately — and if you’ve been following my recommendations, you’re probably feeling a lot calmer than most traders right now. That’s the real value of hedging: the ability to stay steady when everyone else is reacting emotionally.
A while back, I suggested picking up six-month out-of-the-money (OTM) VIX call options as a hedge. Not because I had a crystal ball, but because it’s smart portfolio insurance when things start to feel unstable. The VIX — which measures at-the-money implied volatility on at-the-money S&P 500 (SPY) options — is built to move when markets get stressed. And yesterday, volatility surged more than 10%. If you acted on that recommendation, you’re sitting in a strong position today.
When I brought this up with the room, I asked if anyone had a problem with my suggestion to buy those VIX calls. The response was immediate and overwhelmingly supportive. Comments poured in — “Great call,” “Thank you,” “Understand,” “Heck no,” “Not at all.” That kind of broad agreement isn’t common in trading rooms and it shows just how aligned the group was on the logic behind the hedge.
But let me add something important here. If you didn’t take the trade when it was first discussed, this is not the time to chase it. One of the biggest mistakes traders make is jumping into a hedge after the spike has already happened. If you missed the initial entry, stay patient and let volatility cool off before considering new protection. This strategy works because it’s planned in advance — not rushed into during a surge.
Understanding What You’re Trading
The VIX is the market’s fear gauge, and when traders get nervous, it reacts quickly. That’s why a well-timed VIX call can provide serious relief when volatility accelerates. Right now, we’re approaching key levels that could determine whether we see another major spike. Yesterday’s high is still the first resistance to watch. If we break above that level, the next test is 23.79. And if we push through 23.87, volatility could explode. These are the levels I’m watching closely and they’re the same levels that make those six-month OTM calls so valuable.
Keep in mind that recent moves have been unusually sharp. You don’t get the two biggest swings of the year back-to-back very often. That’s exactly why discipline matters. Patience is part of the process and waiting for volatility to settle before adding new hedges will always serve you better than reacting emotionally to big market days.
Managing Expectations and Avoiding Political Bias
There was a comment suggesting that VIX calls are a solid hedge “especially if Dems win midterm elections.” I understand why people connect political outcomes to market moves, but my backtesting simply doesn’t support that assumption. There is no consistent evidence that Democrats winning midterms leads to market declines. In fact, most midterm outcomes — regardless of party — do not create the kind of directional bias people expect.
Trading based on political narratives instead of market structure and data is a fast track to bad decisions. Stick with the numbers. Stick with the levels. Stick with what the market is actually doing — not what the headlines imply it might do.
If you’re now wondering whether it makes sense to jump into VIX calls, the answer is straightforward. I wouldn’t be buying them at this moment. If you already have the hedge in place, you’re in good shape. If not, don’t chase the spike. Protecting your portfolio isn’t about reacting after the storm hits — it’s about being positioned before it does.
Remember, the whole point of this strategy is not speculation. It’s insurance. It’s there to keep you grounded, calm and focused when volatility picks up. Days like these are exactly why we do it.
Stay disciplined, stay focused and don’t panic. Markets can consolidate after big moves and emotional trading never leads to good outcomes. Keep your head clear and stick to the process.
I hope that helps!
Roger Scott
Roger Scott Trading
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