Playing The Volatility Game

One way we trade the S&P 500 is by examining volatility. When the CBOE Volatility Index (VIX) is at extremely low levels, usually around or below 13, and the S&P 500 is overbought and above our immediate-term TRADE line of resistance, we look for an opportunity to sell the index and vice versa. Yesterday's spike in volatility and downturn in the S&P 500 was brought on by exacerbated selling in gold, commodities and yesterday's tragedy in Boston. When this sort of anomaly happens and happens quickly, we sit back and wait. No need to rush into a market that doesn't work with your trading method.

Playing The Volatility Game - VIXSPX