Volatility Indexes

Money can be made in the stock market during volatile times whether the stock market is going up or down. One stock to watch is XIV, the Inverse VIX ETF. This inverse volatility stock started going down on large volume around the first part of August when the U.S. Congress staged a harmful gridlock over raising the debt ceiling. The fact that XIV was falling hard was a warning of trouble ahead in the stock market. You should have moved to cash or bonds at that time, or better yet, you could have bought TVIX, the double VIX long ETF. You would have made a fortune on TVIX as it surged toward $80 per share.

Then, alas, the stock market changed course again at the end of September. XIV had fallen to less than $6 per share. But things changed on Monday, September 25, when it looked like there was relative calm in the U.S. and it appeared the financial problems of Greece would once again be avoided. XIV jumped more than 3% back over $6. I put in a buy order for the next day. I'll hold it until the charts tell me to switch to TVIX, the opposite. In this way, I am always in to win.