The VIX tracks volatility. They create these useless financial instruments that you can trade.
When it shot up to 60, I bought a put. When it came down to 20, I sold it for a nice profit.
This brings me to this point. It is virtually guaranteed that VIX will move up and down and sometimes quite a bit. One can buy and sell long puts and calls on this stupid instrument and make easy money with very low risk. This is unlike a company or any index where the price is tied to some underlying fundamentals.
First thing that needs to be understood and internalized is that options are truly a zero sum game. Someone sells you an option, and you buy it. Every penny that you earn from that option came from the person that sold it to you. Always.
Now that that fact is understood, not just understood, but clearly understood, you need to ask yourself - why are all those nice people who are selling those options to you so willing to simply hand you easy money with low risk?
I’ve traded lots of options over the decades, but never VIX options. I would suspect that in times of rampant volatility, the prices of options go up and the buyers end up paying additional premium, some of which is time premium that dissipates with time (and whose decline in value accrues to the sellers of options).
