Good morning, traders…
The CBOE Volatility Index (VIX) jumped 3.3% yesterday to $17+ — the highest level we’ve seen since September 3.
Markets dipped after Fed Chair Jerome Powell’s comments suggesting stocks might be overvalued.
His bearish comments spooked investors, triggering the kind of volatility spike that can catch unprepared traders flat-footed.
This is when your trading rules must adapt to meet the moment.
When the VIX crosses 16, you’ve gotta make two adjustments:
Reducing position sizes when volatility spikes makes intuitive sense. What’s less obvious is that trade selection needs to adapt to the moment.
Here’s Why VIX Above 16 Should Change Your Position Sizing (And Trade Selection)…
What VIX Above 16 Really Means
The VIX measures expected 30-day volatility in the S&P 500.
When it sits below 16, markets move in predictable patterns. Trends develop slowly. Support and resistance levels hold.
Above 16? Overnight gaps become common. Intraday swings expand dramatically.
VIX 10-15: Normal position sizing and setup standards.
VIX 16-20: Reduce positions by 33% AND raise standards. Every box must be checked — Smart Money confirmation, volume, clean technicals. Begin hedging.
VIX 21-25: Cut positions in half AND become extremely selective. Only take setups where everything aligns perfectly. Increase hedges.
VIX above 25: Minimum viable positions AND highest standards. Only trade your absolute best setups.
This dual approach (smaller size AND higher standards) can be the difference between flourishing during a high-VIX period and watching your account blow up.
The Selectivity Rule
When the VIX crosses 16, risk increases.
That breakout that “looks decent” when volatility is low? It might fail spectacularly when VIX is elevated.
Support levels that held for months can collapse in minutes during high-volatility environments.
Your setup criteria must become ruthless.
VIX below 16: You can take trades where 3 out of 5 boxes are checked. The market forgives imperfect setups.
VIX above 16: Every single box must be checked. Smart Money confirmation? Required. Volume supporting the move? Non-negotiable. Clean technical levels? Mandatory.
The setups that worked with 70% success rates at low VIX might only work 40% of the time when volatility spikes.
That’s why I’m focusing on The “Dumb Money” Double … a setup that’s generated +57% AVERAGE GAINS and a 93% WIN-RATE this year.*
Want to learn how to trade this setup LIVE?
Join us for a FREE “Dumb Money” WORKSHOP … TODAY at 4 p.m. EST
What High-VIX Setups Must Have
As the VIX moves higher, I only trade setups with ALL of these elements:
Smart Money confirmation — Institutional flow supporting the direction. No retail-driven momentum plays.
Multiple timeframe alignment — Daily, 60-minute, and 15-minute charts all pointing the same direction.
Clean technical levels — Clear support/resistance with multiple touches. No messy, ambiguous zones.
Volume support — Above-average volume supporting the move. Thin volume means thin conviction.
Risk/reward minimum 3:1 — When hit rates drop, your winners must be bigger than your losers.
Skip everything else. I don’t care how “cheap” the options look or how “oversold” the charts appear.
If all boxes aren’t checked, pass.
How To Adjust To +16 VIX
When VIX spikes above 20, options premiums explode. Covered calls generate meaningful income. Cash-secured puts pay substantial premiums.
But you must size appropriately. High VIX creates opportunity AND danger simultaneously.
Manage risk first, capture gains second.
The VIX trading above 16 is your signal to adapt.
Smaller positions + higher standards = better results.
Check VIX every morning. Set alerts at 16, 20, and 25 for automatic notifications.
When VIX spikes, immediately review open positions. Consider reducing exposure on marginal trades.
Yesterday’s Powell-driven selloff was a reminder that market conditions can shift overnight.
Your sizing and selection should shift with them.
Happy trading,
Ben Sturgill
*Past performance does not indicate future results
