The VIX (the Chicago Board Options Exchange Volatility Index) on Thursday taught investors a lesson on why we have price objectives – and not time objectives – on what we buy.

The play: On Wednesday, I wrote about how the VIX was likely to bounce off of support “in the next few days to a week.”

I was wrong, but only because the VIX didn’t wait that long; it popped by about 25 percent on Thursday.

See Jason Bond’s Wednesday call for a spike in the VIX

The chart:

The big move in the VIX is obvious, but the long wick on Thursday’s candle also shows that it didn’t hold the increase for long, fading fast after a big jump in the morning.

The lesson: If something you buy hits your target, take the trade and pocket your profit. Don’t be stupid or greedy and sit on something just because it didn’t take long to do what you expected. There’s no such thing as “too fast” if you hit your price objective and cash out; there is such a thing as holding on too long, because it may not hit your target again within your time range (or ever).

What’s next:  If the VIX now fades back to support, there’s going to be another opportunity to play it again.


Jason Bond runs and is a swing trader of small-cap stocks.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of and the Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

Learn More

Leave your comment

Related Articles: