VIX, Wall Street's Fear Gauge, Is Skyrocketing-Here's How To Trade It

Wall Street's fear gauge, or VIX, is flashing red as the S&P 500, tracked by the SPDR S&P 500 ETF (NYSE:SPY), plunges and volatility explodes higher on Tuesday.  

With the VIX surging roughly 30% morning trading, traders are scrambling for ways to play—or hedge—the spike in anxiety.

When the Cboe VIX jumps 20% to 30%—like it is currently—it's a clear signal that traders are rushing to buy protection and price in higher near‑term risk for the S&P 500. 

Instead of touching VIX futures directly, many active traders turn to exchange-traded products that track VIX futures to express a tactical view on fear.

What Is The VIX?

The so-called "fear gauge" is derived from S&P 500 options and reflects the market's expectation of 30‑day implied volatility. 

A rising fear gauge typically coincides with equity drawdowns. That’s why volatility products are often used as short-term hedges or speculative tools during panicky tape. 

However, investors cannot buy the spot VIX itself, but rather can trade its futures, options or ETPs built on those futures.

How To Trade The Volatility

For equity-style access, VIX Short‑Term Futures ETF (BATS:VIXY) offers unlevered 1x long exposure to a rolling basket of front‑month VIX futures, designed to benefit when volatility rises sharply. 

VIXY is structurally prone to long‑run decay, so it is best used for days‑to‑weeks trades around catalysts rather than a buy‑and‑hold hedge.

For traders looking for more torque, ProShares Ultra VIX Short‑Term Futures ETF (BATS:UVXY) targets 1.5x the daily move of that same short‑term VIX futures index. 

UVXY's leverage, daily rebalancing and exposure to contango (futures prices for later months trading above today's spot price) mean performance can diverge sharply from a simple 1.5x multiple over time, especially if held through choppy, sideways volatility regimes. 

In calm markets, that structure leads to aggressive bleed, which is why veteran traders treat UVXY as a short‑term trading vehicle, not a core portfolio position.

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