VIX Goes Wild!

I have been advocating buying call options on the Chicago Board Options Exchange Volatility Index for the last week or so and this trade paid off in a major way today as the VIX surged. The Fear Index, as it is also known, moved 19.22% higher today to close at 22.27. The February 22.50 calls finished 65 cents higher on the day, rising from $1.45 to close at $2.10.

The Dow Jones Industrial Average closed 213 points lower as fear made its way back into the market in a big way. If you are long VIX calls, I think that you can hold onto at least a part of your position going forward. The profits right now are good, but if this is indeed the pull back traders have been waiting for, it could just be the tip of the iceberg on this trade.