Turn Market Fear into Profits with High Volatility Trades
If someone tells you they have a "guaranteed" winning trade strategy, run the other way! Success comes from high-probability setups, smart risk management, and an understanding of market dynamics.
But what if there were a strategy with an overwhelming likelihood of success? One that takes advantage of the natural, built-in decay of Volatility ETFs, futures, and options?
At Master Trader, we use an objective, rule-based approach to trading stocks, futures, cryptocurrencies, and options.
Our Advisory Swing and Options Letter focuses on identifying high-probability long and short trades in stocks and options using Master Trader Strategies (MTS).
One of our favorite income strategies? Selling options and credit spreads—profiting from time decay and volatility contraction (a powerful edge many traders overlook).
Why Volatility is the Perfect Trading Opportunity
The VIX, often called the “Fear Index,” measures the market’s expected volatility. When fear spikes—like during a sharp market sell-off—traders and investors rush to buy put options for protection. This causes volatility-based products (like VXX, UVXY, and TVIX) to surge.
But here’s what most traders don’t realize:
• Volatility ETFs and futures are not designed to go up and stay up—they have a built-in structural decay due to how they’re priced and rolled over time.
• After a volatility spike, these products face strong headwinds, making them prime candidates for bearish trades.
• This creates one of the highest-probability opportunities in the markets—trading bearish strategies on volatility products after the market fear subsides.
Daily Charts of SPDR S&P 500 ETF Trust (SPY) and BARCLAYS PLC (VXX)
How We Profit from Volatility
Using Master Trader Strategies (MTS), we wait for:
• A volatility spike (often triggered by a market sell-off)
• A bullish reversal in the S&P 500 (SPY)
• Confirmation from our technical patterns
Then, we execute high-probability bearish trades on volatility products, such as:
• Buying put debit spreads
• Selling bear call credit spreads
How Do You Make Money from This Information?
Recognizing when the Volatility Index (VIX) reaches a historical extreme, we can short the ETF symbol VXX, which moves with the VIX, or sell a bear call credit spread.
We chose the bear call credit spread for this trade, expecting time decay to work in our favor even if volatility didn’t fall significantly.
The Master Trader Weekly Options Trader focuses on credit spreads expiring in 10 days or less.
Posted Trade:
• Shorted the Mar (3/14) $65/80 bear call credit spread for $0.88/share
• Climactic Sell Setup and reversal (and SPY Climactic Buy Setup)
• 3/12: Closed half at $0.28/share
• Closed remaining at $0.10/share—locking in profits!
This trade took advantage of volatility’s natural decline and time decay, allowing us to profit without needing a significant market move.
The Master Trader Volatility Course is the Ultimate Guide to Trading Volatility Products. Use Coupon Code VOLPROFITS for 50% Discount
When Volatility Spikes, it is One Of the Greatest Moments in the Markets to Reap Huge Profits
