It’s been a rough week for many traders…
The S&P 500 ($SPX) has just undergone the biggest price drop of the year and volatility levels are now sitting at a 15 year high!
As an investor, you’d think it would be a good time to take whatever money you have on Wall Street and run, but that’s not necessarily the best case scenario.
Even with the market in the red, you can still make the most out of buying and selling stocks.
Here’s an easy way you could’ve swapped out this recent price plummet for BIG BUCKS instead.
Since the start of the week, the volatility index ($VIX) has climbed as much as 70%!
An increase like that is simply unheard of and we haven’t anything that high in the past decade and a half.
But what exactly does this mean?
You’re probably thinking that growth in the stock market automatically spells out PROFITS, but it really just depends on what side of the spectrum you’re on…
The volatility index traces rapid and unpredictable price fluctuations. So the fact that $VIX levels are up means that almost all other aspects of the market are down.
And they are! Right now, fewer than two dozen companies are hanging around in positive territory.
That’s saying a lot, considering HUNDREDS of companies make up the S&P 500 index (hints the 500).
Take a look the $VIX chart below to pick up on this movement for yourself.
You can see this price hike I’m talking about and compare it to the high levels this index saw back in December.
I don’t know if you remember, but the 2018 holiday season was when S&P 500 values dropped down into the $2,300 range, a record-setting low point for the year.
So it makes sense why the middle of the $VIX chart reflects the opposite.
I say all this to show you that there’s always money to be made from the market.
For example, if you were ahead of the game and able to catch wind of this most recent downtrend before it took place, you could use the volatility index to your advantage and profit from it.
Although you can’t directly invest in $VIX, you can still get in on these gains by buying into ETFs like VIXY, that trace its performance or simply shorting the market as a whole.
Just know that you should never feel as if you’ve exhausted all of your trading options.
In the event of bearish activity, you can always turn the tables and bet against the stock market.
The volatility index is simply one tool you can use to gauge that and earn some extra income in the process.
