Three Solid Ways to Trade Excessive Fear

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In a market this crazed, it just makes sense to protect for downside.

It’s why we again highlighted ways to trade volatility.

In fact, as we noted, “Fear is running wild on the Street again.  But don’t panic.  Use it to your advantage. At the moment, the major indices are taking a hit on inflation, recession, the Federal Reserve’s Jackson Hole Symposium, and the likelihood of bigger interest rate hikes.”

With that, we highlighted opportunity in:

The ProShares Ultra VIX Short-Term Futures ETF (UVXY) 

The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index.  On Friday’s pullback, the UVXY ran from about $9.09 to $10.41.  Should markets pull back again on Monday, the UVXY could push aggressively higher.

iPath S&P 500 VIX Short-Term Futures (VXX) 

The VXX ETN provides exposure to the S&P 500 VIX Short-Term Futures Index. On Friday, the VXX ran from about $19.50 to $20.15.

ProShares VIX Short-Term Futures ETF (VIXY)

ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration. The VIXY would run from about $13.50 to $14.77 on the market pullback.

Granted, these aren’t massive gains.  But they still did better than most long positions.