The VIX rose over 20% today while the Dow Jones dropped almost 300 points.

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by JayFig_The_Trader

3 days ago I asked readers here if they thought Volatility would rise within the next week. A lot of traders are confused about the difference between the VIX Index and VIX futures.

There are no ETF’S on the VIX Index itself. The only way you can trade the VIX Index is through options.

There are many ETF’S that trade VIX futures. VIX futures ETF’S do not track the VIX Index however. They track the futures of the VIX which is much different.

The problem with VIX futures ETF’S is there is a constant decay in their price. They use other elements like contango and backwardation to determine their price and direction.

A lot of retail traders get sucked into trying to trade these VIX futures ETF’S like VXX, UVXY, and TVIX. And a lot of traders lose money trying to trade these ETF’S.

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I personally am not a fan of the VIX futures ETF’S. I feel they are only good for shorting when the VIX spikes. I prefer to trade the VIX Index with options which is the only pure play on the Index itself.

11 Closed Trades in August 10.80% Average Gain per Trade

Yesterday’s Open Positions

  1. Long VIX Calls: Closed Today
  2. Long XOP Calls: Still Open

Current Short Term Outlook:

  1. Bearish Volatility
  2. Bullish Oil & Gas Co’s
  3. Bullish Gold Miners

Current Open Positions:

  1. Short VIX Calls Sept-19th-14
  2. Long XOP Calls August-17th-41
  3. Long GDX Calls Sept-19th-20
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