Buying Opportunities When the VIX Jumps
Investing or opening long positions when the
VIX
jumps can be a profitable strategy if done correctly, as it often signifies elevated market fear and potential undervaluation of assets.
But first, let's figure out what
VIX
is!
The Volatility Index, or
VIX
, is a real-time market index representing the market’s expectation of volatility over the next 30 days. Often referred to as the "fear gauge," a surge in the
VIX
usually signifies increased uncertainty, risk, and investor sentiment that the market will move sharply, either downward or upward.
So, now let’s take a look at the chart!
You probably remember how we opened a position at level 13, and now we have designated a profit zone, and now the price has come exactly to this zone and I have already closed the position, now that the
VIX
has grown, this creates a good opportunity to buy heavily oversold securities long.
How to find oversold securities, you can use a screener and filter out securities with RSI < 20 or were less than 20 recently. It is important to consider the quality of securities so as not to buy paper that no longer plans to grow. There are some good securities that I've already bought:
DG
,
DLTR
, WBA.
Managing Risk
Investors should consider implementing risk management strategies, such as stop-loss orders and portfolio diversification, to protect against significant losses when the VIX is high. Maintaining a well-diversified portfolio and avoiding panic selling are also essential in navigating markets during increased volatility.
VIX
jumps can be a profitable strategy if done correctly, as it often signifies elevated market fear and potential undervaluation of assets. But first, let's figure out what
VIX
is! The Volatility Index, or
VIX
, is a real-time market index representing the market’s expectation of volatility over the next 30 days. Often referred to as the "fear gauge," a surge in the
VIX
usually signifies increased uncertainty, risk, and investor sentiment that the market will move sharply, either downward or upward. So, now let’s take a look at the chart!
You probably remember how we opened a position at level 13, and now we have designated a profit zone, and now the price has come exactly to this zone and I have already closed the position, now that the
VIX
has grown, this creates a good opportunity to buy heavily oversold securities long. How to find oversold securities, you can use a screener and filter out securities with RSI < 20 or were less than 20 recently. It is important to consider the quality of securities so as not to buy paper that no longer plans to grow. There are some good securities that I've already bought:
DG
,
DLTR
, WBA. Managing Risk
Investors should consider implementing risk management strategies, such as stop-loss orders and portfolio diversification, to protect against significant losses when the VIX is high. Maintaining a well-diversified portfolio and avoiding panic selling are also essential in navigating markets during increased volatility.
