I’ve been predicting that the bears would be taking over the markets in May and, just a week into the month, they’re running with a vengeance.
The Dow Jones Industrial Average, S&P 500, and Nasdaq have all erased their recent gains over the past trading week.
But there is one index that’s faring better than the majors… It’s the “fear index.”
Officially known as the Chicago Board Options Exchange (CBOE) Volatility Index (VIX), it is an extremely popular index that measures the volatility in the markets.
Naturally, right now more and more traders are playing the VIX to fatten their wallets off the back of investor fear in the markets.
Well, there’s a right way and a wrong way to trade volatility, and what these folks are trading to make a quick buck or two is outright dangerous to your wealth – now and into the future.
So before you make the same mistake they are, let me tell you why this is the worst way you can play volatility…
Why I Won’t Touch These “Market Mambas” with a 10-Foot Pole
After my family, my greatest passion is studying the markets. It’s really hard for me to pull away from the markets when they’re open, and I get a bit stir-crazy when the markets are closed – that’s how deep my passion runs.
And I absolutely love options – and trading them. In fact, I love trading options on virtually every instrument out there that allows me to.
But there is one instrument I’ll never trade options on…
In fact, even if you offered me money to trade these options, I’d tell you to keep your money.
And I’m talking about iPath S&P500 VIX Short Term Futures ETN (NYSE Arca:VXX) options…
These options are like Black Mambas, some nastiest, meanest, most poisonous snakes on Earth, and I don’t want to go anywhere near them.
But before we get into why you shouldn’t either, let’s back up a minute and talk about what these are…
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