We’re at a pivotal point in the market. There’s so much uncertainty coming from various areas of the market. Between Fed Tapering, Syria’s conflict and Middle East tensions, and the debt ceiling debate, we have a number of situations that can really send markets lower on a global scale. I am sure we have all noticed volatility picking up in recent times, since all these events seem to be converging on us all at once. But in crisis there’s always opportunity!
I recently started looking at the Volatility Index (VIX) (VXX) (UVXY) as a way to profit from the uncertainty in the market. The volatility index measures the implied volatility of the S&P 500 index options. Some like to call the VIX the fear index or fear gauge, because the higher it goes the more uncertain the psychology of the market is. It is also negatively correlated to the S&P 500. The VIX is looking like a really good trade right now as a way to profit off the uncertainty, hedge your portfolio, or even use as an indicator for where we are in the market.
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