Turn Market Fear into Profits with High Volatility Trades - The Trade is Posted Below
If someone tells you they have a "guaranteed" winning trade strategy, run the other way!
Success stems from high-probability setups, effective risk management, and a deep 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, options – and, yes, Volatility products.
One of our favorite income strategies? Selling options and credit spreads—profiting from time decay and volatility contraction (a powerful edge many traders overlook).
The Weekly Options Trader letter, which sells options/spreads for weekly Income that expire in 10 days or less around Master Trader technical turning points, CLICK HERE
The VIX Declines After a Spike - EVERY TIME!
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, such as VXX, UVXY, VIXY, 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 because they have a built-in structural decay due to how they’re priced and rolled over time.
Because the future is unknown, VIX futures are typically more expensive in the future, creating strong "headwinds" for the Volatility ETFs whose fund manager must roll expiring futures into more expensive ones.
• After a large volatility spike, such as the one we are experiencing now, once the broader markets stabilize or exhibit a bullish bounce, these products are 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
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX)
The Spike is Happening Right Now! The Trade Below was Posted Friday.
VIX and Volatility Products Spiked with Market Selloff
How We Profit from Volatility?
Learning all the ins and outs of Trading Volatility is the focus of the
Master Trader Volatility Course.
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.
Using options, a combination of contraction and time decay works in our favor. Even if volatility doesn’t fall significantly, the premium in the options will decline.
The Master Trader Weekly Options Trader focuses on credit spreads expiring within 10 days or less, and complete trading strategies, including position and money management, are updated.
Posted Trade last Friday based on the above chart:
4/4: VXX – Shorted Apr (4/11) $125 calls for $.90/share (add at $2.00/share and $5.00/share on a bounce). Possible Gap and Crap, fading an instrument which contracts over time.
This trade capitalizes on the natural decline of volatility and time decay, enabling us to profit without requiring 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!
