Look what happened to VIX right after December's CPI release. Equity and bond markets reacted positively, so VIX tanked... but then bounced most of the way back by 12:30.
Traders who are long and want to hedge news could try this play:
Traders who are long and want to hedge news could try this play:
- Set stops for their longs and buy an appropriate amount of VIX.
- If the markets tank, expect VIX to advance strongly, and take a profit as soon as you can.
- If the markets rip, wait for VIX to dump and bounce and sell the bounce.