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True but it was even lower in 1994-1995 which actually preceded a four year rise! Not to say this will happen again, but we should remember it (a) can trend even lower for months or even years and (b) when it rises again it can do so uneventfully (1996-1999) or violently (2007-2009).

 

I question whether the VIX at it's current level is particularly actionable.

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From what I can see in the chart the VIX was very volatile from 1986-1990 especially when the market crashed in 1987. Then from 1991 through 1994 the VIX was pretty stable as the market traded nearly sideways.

When the market started to rally beginning in 1995 the VIX became more volatile again by 1997 and has continued to be volatile ever since with strong fluctuations both to the downside and upside.

 

I believe that soon the VIX will move much higher, i am not sure how i will trade, should i try with ETF or with options?

5aa711aa511fd_vixvssp.gif.6865f033b358c1d6460de52ca0fdf77a.gif

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Okay, so the last I checked the VIX was trading around 14. Though I agree this is low, it has a way to go before it gets to danger territory which I'd define as around 10. But even that is no guarantee of an immediate reversal.

 

I'd also point out that it is continuing to post lower lows and lower highs which is a guidepost for a bearish security or index.

 

I'm not saying it will go lower. I'm just saying I've seen no real evidence that it is staging a long term uptrend as of yet. Spikes will always occur, such as we just had in late 2011.

 

If you're really sure the VIX is going to spike up within a reasonably short time, you could buy a straddle. Of course being negative-theta averse I'd personally opt to keep the expirations distant. The advantage to this kind of trade is you can wait in the wings for the spike in volatility that will push the prices into the profit zone and snap the trade closed whenever that happens.

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I agree with you JasonW, there is no real evidence that it is staging a long term uptrend as of yet, but i would like to play the scenario of a spike, so i have just entered into an options trade, going long on March call with a strike price of 19, priced at 0.60.

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Investors are very bullish about the market and that makes me feel very uncomfortable, this week the VIX hit 16, i am expecting with the S&P correction, VIX will be above 20 in the coming weeks.

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The VIX index hitted 27 back in May 2012, from that point has lost more than 50% at it looks thatcan not manage to rebound. I am still bullish for VIX and keep me long positions.

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