The Best Way To Play The VIX Right Now

Something is up.

Something's happening with the VIX – the "Fear Index" – and I think it's going to be big.

Now, I can tell you from experience, this stands a good chance of bushwhacking investors who aren't ready for it, but I also know that if you're ready with the right strategy and the right trades, you'll clean up.

Let me show you what's about to happen – and exactly what to do about it…

Here's What's Coming for the Market

If you're not familiar, the VIX, very briefly, is a measure of the market's expectation of price changes on the S&P 500 index over the next 30 days. It's complicated – I could take a few days and explain exactly how it's calculated, but what most investors need to know is the VIX is an excellent at-a-glance measure of sentiment… particularly "fear."

When I talk to new investors and traders, I find it helpful to compare the VIX to a traffic light: If it's red, the VIX – and fearful sentiment – are likely to drop.

Yellow? Expect a strong move in either direction, so slow down and get ready. That's about where we are today.

If the light's green, expect the VIX and fear to plow upward and onward at full speed.

When the broader market's rising, the VIX usually falls because – hey – who's afraid of rising stocks, right? When prices are falling, the VIX usually rises because investors are so worried they're shuffling money around, making protective moves. When investors realize that the VIX is rising, particularly in a market that's up 13% year to date, they can flat-out panic.

Like I told Jim Cramer on CNBC's "Mad Money" the other day, volatility usually moves or manifests itself in a few very different ways. Each "flavor" presents different opportunities and different dangers.

There are volatility "surges" that can happen every day thanks to the 72 million new investors and traders who've hit the markets. Those can represent significant opportunities – there's more on that here.

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