Three Top Ways to Trade Excessive Market Volatility

December 20, 2021

Ian Cooper

Cooper was among the few analysts to spot the financial crisis of 2008, the top of subprime and Alt-A, the death of Lehman Brothers, Bear Stearns, and New Century Financial, and even the Dow’s collapse to 6,500, as well as its recovery. He even called for gold to rally well above $1.500 when it traded under $600.

There’s a good deal of fear in the market.

At the moment, the Dow is down 646 points, as the NASDAQ sinks 241.

All thanks to the omicron virus, which is now in 43 U.S. states, and about 90 countries.

Worse, Michael Osterson, director of the Center for Infectious Disease Research and Policy at the University of Minnesota says, “We’re really just about to experience a viral blizzard,” as quoted by CNN. “In the next three to eight weeks, we’re going to see millions of Americans are going to be infected with this virus, and that will be overlaid on top of Delta, and we’re not yet sure exactly how that’s going to work out.”

While research suggests omicron is less severe than previous strains, fear is still on the rise, which leads to higher volatility, which can lead to severe market sell offs.

So, what’s the best way to protect your portfolio from omicron-fueled chaos?

One way is to trade volatility-based ETFs. In fact, some of the top ways to do that include:

ProShares VIX Mid-Term Futures ETF (VIXM)

At $33 a share with an expense ratio of 0.85%, the VIXM ETF tracks the performance of the S&P 500 VIX Mid-Term Futures Index. Along the way, the ETF allows investors to “profit from increases in the expected volatility of the S&P 500, as measured by the prices of VIX futures contracts,” as noted by ProShares.

ProShares Ultra VIX Short-Term Futures ETF (UVXY)

At $18.55 with an expense ratio of 0.95%, the UVXY ETF was designed to match 1.5x the daily performance of the S&P 500 VIX Short-Term Futures Index.

ProShares VIX Short-Term Futures ETF (VIXY)

At $19.70 with an expense ratio of 0.85%, the VIXY ETF tracks the performance of the S&P 500 VIX Short-Term Futures Index. The index tracks the returns of a collection of futures contracts that have a weighted average of expiration to one month, according to Financhill.com.

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