On our side, we price our cash Volatility Index (VIX) contracts in a different way to the rest of our cash index markets. Instead, with us, you can use spread bets and CFDs to take a position on the movement of the VIX, as well as VIX futures and exchange traded funds (ETFs). When you trade the VIX, you aren’t trading an asset directly because there is no physical asset to buy or sell. There is even a mantra that states: ‘when the VIX is high, it’s time to buy. The VIX is thought to predict tops and bottoms in the SPX. If the volatility index declines, then the S&P 500 is likely to be experiencing stability. If the VIX moves up, it is likely that the S&P 500 is falling in price. There is a strong negative correlation between the VIX and stock market returns. Still, remember, trading volatility is not trading a market downturn, as it is possible for the market to decline but volatility remain low. This is why VIX values are quoted as percentage points.įor the past several years, if the VIX was trading below 20 then the market was considered to be in a period of stability, while levels of 30 or more indicated high volatility.

When you trade volatility, you aren’t focused on the direction of change, but how much and how frequently the market has moved. Volatility is a measure of the movement of an asset’s price, rather than the price of the asset.

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Vix index