Contango, no more. We’re in full-blown backwardation.

VIX Futures Curve
Backwardation occurs in the VIX futures curve when futures with longer expirations are cheaper than those with shorter expirations. And right now, the VIX is trading above month 1, month 2, and month 3.

When the curve is in backwardation, it can typically mean one of two things. Sometimes, it’s a sign of a bottom in the market. This would turn my VIX light red.

Green Traffic LightOther times, it means things are about to get way, way worse. And that would mean my VIX light is green.

And would you look at that – my light is blaring green today.

This market is borderline terrified. We’re about to see big moves and a lot of choppiness.

And I’m not the only one who thinks so. Because I’m track a big, huge, MASSIVE trade in the VIX.

Institutional cash is betting on the VIX shooting higher through the end of the year…

But you don’t need millions to piggyback their trade.
Take a look at this massive VIX set-up:

This big-money trader sold the January $19-$17 put spread and bought the January $60-$70 call spread.

We’re looking at a hedge against a long portfolio here – one that does extremely well if the VIX blows higher into 2022. And it’s a sign that some long traders are starting to dip a toe in the bearish water…

Which, considering our bright green VIX light, is a smart move. One that I’m looking to piggyback, in fact.

I’d suggest pairing the VIX with the SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA:DIA) here.

You can go long on DIA with the December 17, 2021 $352 calls. Then, buy the VIX December $35-$50 call spread.

This trade, just like the big money one I showed you above, will do very well in the case that the QQQ’s continued selling keeps the VIX high, while the industrial-heavy DIA reigns supreme…

A likely case for the new year, if you ask me.

Trading the VIX is different than trading the broader stock market. And with the wild up-and-down swings that we’ve seen over the past few weeks, it’s important to know your stuff before dumping a ton of cash into the volatility index.

That’s why I’m spending the entire week in the Profit Revolution live room, walking through the day’s VIX movement…

Explaining what it means for the market…

And showing viewers how to trade it.

The VIX dipped below 30 this morning, but I’m willing to bet on it making another run above that level. And with the VIX this high, the profit opportunities have never been better.

So, join me in the live room – we kick off every trading day at 2PM ET!

Mark Sebastian
Founder, Profit Takeover


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