How to Trade the VIX (Simple Technique)

0:00 Okay, today I'm going to show you how to make a lot of money off of the VIX VIX. A lot of people don't know how to use the VIX properly. I'm going to show you how you can make explosive profits, a lot of money very easily. All right, so let's get started. All right, so what you want to do when trading off the VIX is first know what the VIX is. The VIX is a volatility index based on the S&P 500. Okay, so this shows volatility as it comes in and out of the market. This has also been known as the fear and greed index. Some people say that when the market is in fear, the VIX spikes, a lot of fear comes into the market, right? This was the Trump tariff uh uh liberation day. A lot of unknown fear came in, the market sold off, VIX went through the roof, right? You look as we fast forward uh through the rest of the

0:46 year when tensions got risen in the market and fear started to come back in, the VIX went up again. The VIX went up again, right? If we look back in history, here was uh we go back to 2020. We all remember 2020. Look how high the VIX went then, right? Fear, a lot of fear came into the market and the VIX spiked. So, it's pretty predictable that volatility is going to come into the market from time to time, right? So, how can we measure that and take advantage of it? Well, we can look at this chart and say, okay, when the VIX spikes, it's pretty common for it to reverse and come back down in the near future, right? Every single time it has spiked in a relatively short period of time, it's come back down. Spiked here, right? Comes back down. Spikes here, comes back down. Spikes here, comes back down. So,

1:32 the question comes, well, gee, how can I take advantage of this? Now, I had made a video about the VIX about a week or so ago and published it. [snorts] Then, some people put comments and some things I started noticing. It was too difficult of a VIX strategy. Um, I left out some context. I didn't realize that that was important to make it successful. So, I have an easier way to play the VIX. Not an easier way, I'll say a safer way, a more way a better way to make money with less risk and easier for the human mind to um we'll say deploy it without making a mistake. This is one that you can do easily and make a lot of money. Okay? And I'm going to show you how. So, just pay attention for the whole video. Watch it to the end. This is a really good trade. All right? So, from here, we're going to go from the VIX. We're gonna go to the SPY. The spy is S&P 500 index. It

2:19 tracks the S&P 500. So when the VIX goes up, the S&P 500 generally goes down or always goes down, right? It's a it's a drop. The fear is coming into the market. The market is selling off. So we look at the S&P 500, say, gee, at this point in time, let's zoom in and say when this market was at its low, we'll say on Monday, April 7th, the market was hitting its low right here. Let's see what the VIX was doing. So, I'm going to go back to the VIX. And on April 7th, well, look, the VIX was spiking. So, if you were to come in at this moment and say, gee, the market is rising in fear. Trump put on these tariffs. Liberation day. The market is freak out. Freaked out. They don't know what's going to happen. Fear has entered the market in

3:04 an enormous way. Well, what could you do right here to take huge advantage of this VIX spike? Because we know what happens after a spike, a decline, right? The VIX always comes back down. Look at the history. It always comes back down. So, we can anticipate that. We can participate in its move and make a ton of money. How? By buying the spy right here. Now, I'm going to tell you something I did as a the VIX spike went up when Trump did these tariffs back in April of last year. Right? I bought some spy right here. I bought some more spy right here. Was any of these a good trade or a bad trade? No. These were all good trades. Right when it got to this bottom, believe it or not, I put a little bit of money in right there. And I'm going to tell you the numbers here. I don't like to tell numbers on my channel, but I'm going to tell you these. I bought these for $61 a share

3:50 for LEAPS. I bought some call LEAP options, and they went up to $172 a share shortly after. So, look at that enormous amount of money I made on that one trade. Right, the VIX spiked. Fear entered the market. I bought the S&P 500 LEAPS option right here at $61. It went up to $172 shortly after. I made a ton of money. Life-changing money for some people. This can turn a small account into a large account for some people. It's a great trade. It's something you need to learn and study. Okay? I'm not saying go out and every time the VIX spikes, buy the spy and hope it works. I'm [snorts] saying study the VIX. Study its relationship to the spy. So when these opportunities present themselves, because one is coming in the future, we know for sure. We just don't know when.

4:37 And when it does present itself, are you going to be ready to take advantage of it? So let's look at a little more history on this, right? Go back to the 2020 spike. Okay, I made a trade here too. Wasn't as good as my leaps trade. I don't generally buy the triple index u ETFs, but in this particular instant when the market started selling off, I bought some here, right? I bought someone the market when the VIX was up here. But when it was way down here, believe it or not, I bought TNA, which is a triple index of the Russell 2000 index. And I bought it down here. And when it reversed, I got scared cuz COVID was a scary time for all of us. No one knew what the heck was going to happen to the market. But I sold out right around here. I made a ton of money. I really did. I made a ton of money. From here to here is all it took. I made a ton of money. Right? Later on, I added

5:23 some other strategies, but CO was a different scenario. So what you got to realize is gee the human mind all this fear is in here right we're all going to die this virus going to kill us all the market sinking sinking sinking are you going to have to wherewithal to say gee I want to buy the spy right now because the the world is going to end so you got to just plan for that right so if you put that in your planning and say gee I'm waiting for this moment because they always say the same thing too here's how you know it's going to reverse they say this time is different right they said that during covid and I might have bought into that you know with all my 30 years of experience I still might have bought into that fear. This time is different. It's It's not going to come back. So, don't let that fear come in and scare you. You could even draw. I'm going to show you some benchmarks to follow, a little bit of framework cuz I like to do everything with context. You want to have a framework, right? So, you

6:08 could come in here and say, gee, every time the VIX spikes at 40, I'm going to buy some highleveraged instrument such as a LEAP, a SPY LEAP. Or maybe if the spy spikes to or the VIX spikes to 50, I'm going to buy a LEAP, right? or maybe a triple index ETF, whatever is the one you prefer and what you're used to trading with your own set of skills. Pick your own poison, right? But you can make a ton of money. So, let's just look when it goes up to 40. Let's just say you bought um some position, some leverage positions. Now, it went up to 50. Are you unhappy that you bought this leverage position? No. Because you know it's going to come back down. You got to have the confidence, right? Goes up to 50. You pile on a little bit more. You know, if you're really a risk taker, it goes up to 60, you put on some more

6:55 positions, right? Because, you know, it's coming back down. And when it comes back down, what'll happen to your S&P positions? Let's go back to SPY. Your S&P 500 positions when that that VIX starts to come down, well, these start to rise and you will make a ton of money. Okay, these opportunities don't come very often. I know if you look at the the opportunity, we'll go back to the VIX. Look at the VIX. the opportunities only come, you know, maybe every once in a while, like every year, year and a half. Let's look, we had one back in April. We had one in 2024 in July, a very shortlived day. So, you got to be uh tentative to your market and you see something, you know, blood in the streets all over the TV, all over the news, and markets in turmoil, and the economy is going to crash and everything's going to go to hell in a hand basket. Well, that's your cue to

7:41 say, "Man, I got to go buy the S&P 500 or some other leveraged instrument that correlates with the VIX cuz the VIX is spiking. I want to buy an instrument that is going to go up when the VIX drops because we know from history that when the VIX spikes, it drops." Okay? So, these are huge opportunities to make some huge money. I hope I'm clear. I hope I'm explaining this properly where you can understand it. If I'm not, please put some questions down in the comments and I'll be happy to answer them. Okay? Just going to go over this one more time for you and just show you the spy spy, right? There's other instruments that track the S&P 500. You can use any one you want. It doesn't really matter. You could even buy the QQQ if you want off a spix off a VIX spike. It'll [snorts] do well, too. But you just look at these days when the VIX

8:27 was really high. That brought the S&P really low. And if you get in right here, for God's sake, don't go all in. Whatever you do, that'll put so much stress on you if it dips down. You know, here's a neat little trick you want to know right here. If this pulls back, let's just say you're in the market right now, right here, and all a sudden it pulls back to here. What do some people do? Well, some people freak out and they sell, right? Oh my god, it's going to go down to zero. They sell, they get out, the market recovers and comes back up to here, they finally get back in and they lost out on their gains. Or some people never get back in. So, what you want to do is put this in your mindset. When the VIX spikes to a certain level, put in your mind, I'm going to buy some leverage. So, let's just say that the VIX goes to 30 right here. Hey, I'm going to buy something. It goes to 40. I'm going to buy some more, but I'm never going to put more than 20% on my portfolio. And why is

9:13 that very important that you acknowledge this little tip I'm giving you right here. Never put more than 20% in. Because I'll tell you why. If you put 20% in of your portfolio right now in a leaps and this thing crashes, say another 10%, you're okay, right? You might have lost half of that leap. You lost 10% of your portfolio. It's not lost. It's just temporarily down, but on your mind, on your psyche, it's going to tell you you lost a bunch of money. It's going to freak you out. If you have 40% in right here and it goes down half on your leaps, 10% market drop would be like a half drop on your leaps, you're going to freak out. It's going to prompt you to sell and you're going to take a massive loss. So, how do you prevent those massive losses? Well, you don't put your mind in a position to make that mistake, right? You you leverage up, but you leverage up with some common sense. I'm only going to put 20% of my money

10:00 into this leveraged position because I know it can go down further, right? And when it goes down further, I don't want to freak out and get scared. Oh my god, I might lose everything. So, I'm protecting my brain's defense mechanism from turning against me in moments of sudden fear, okay? Because these are intense moments. There's no way around it. There's no two ways about it. You get in this situation and the market drops and you got a leverage product. Market drops 10%, you just drop 30 to 50%. You get a little intense, right? You don't know how far it's going to go down. You start looking back, say, "Oh my god, it's going to go all the way down to here. I might lose everything. I can't do that. I have to get out. You get out and now you take a huge loss, right? You got to be able to maintain your mentality in a strong position. So, I got 20% in right here. It drops a little further. I'm not going to sweat it. I'm going to wait it out because I

10:46 know this is going to do a mean reversion because the VIX always recovers. But when the VIX goes back down, we go back to the VIX. So when the VIX comes back down, right, you're going to make a lot of money and you know it's going to come down. You just have to wait it out. So if you're going to do a leverage position, I'm going back to the SPY again now. If you're going to do a leverage position such as a LEAPS, make sure you do a far ddated LEAP so it has time to recover. If you're going to buy a leveraged ETF, now you don't have to worry about time decay. You can wait it out longer, but you'll make more money off a LEAP. If you don't understand LEAPS, don't get involved until you fully understand them. But I buy leaps in these situations, okay? They don't come that often. I keep cash ready. I keep opportunities open. Trust me, folks. It's hard to do. It's a scary thing to do for a lot of people. If you're new to trading, you may not have

11:33 the mindset for it yet, but put it in your mind. Put it on your list. Start studying it. Start learning it. Start preparing for it because this opportunity is going to come again. Right? I talk a lot about market cycles. Right? Here's our cycle. I'm going draw the line again for you if you haven't seen some of my other videos. But here's the cycle, right? We're going we're going in a position where eventually this thing's going to turn down. Here's our channel, right? And here's our moving averages. And here's the mean reversion. Eventually, it's going to revert to this mean. It sometimes overshoots it. It might come all the way down to this channel and bounce back up. We don't know. But you certainly do not want to be buying leaps up here. You certainly don't want to be buying stocks up here to sell cover calls on. You shouldn't even be doing cash secured puts up here. really, you should just be holding your long positions. Whatever

12:18 you're going to hold for your long term, you should be holding them right here. Or when it starts to come down, get out. Okay? You could trade many different ways. I'm telling you how I do it. I I hope I'm helping you. Okay? I also included a free cheat sheet guide to this video. Uh it's in the description. It's first link. You can download it. It'll help you give you some context to your trades, when to do what what. I hope it's beneficial. Again, thanks for tuning in. I'll talk to you soon.