To The Moon

The market has really not stopped recently. One side is Greenland-related geopolitical issues are making waves again, the other side isJapan's uncertain fiscal outlook directly ignites selling sentiment in global bond markets。 The "pretending that the years are quiet", which lasted for several weeks, was instantly broken. Investor confidence in U.S. policy is beginning to loosen. "Sell America ( Sell U.S.)"This old script has been turned out again by the market. Risk aversion is heating up rapidly, and global risk assets are collectively under pressure. This is no longer just a matter of an emergency, but the market's response toFuture uncertainty is obviously on the riseThe real reaction of.

As soon as the market opened on Tuesday, the U.S. stock market directly gave everyone a show ⚠ ️ ——Stocks, bonds, and foreign exchange three kills。 The S&P 500 index plummeted by more than 2% in a single day, and the gains during the year were wiped out, and it also hit the largest drop in nearly three months; U.S. bonds are also having a hard time here, with long-term and short-term yields rising together, and selling pressure is visible to the naked eye; The dollar and technology stocks weakened simultaneously. On the contrary, old-fashioned "safe havens" such as gold were once again flopped by funds and rose steadily.

What really puts "panic" on the face isVIX Index📈 。 In a short period of time, it rushed to a new high in nearly two months, and even once broke through the key psychological barrier of 20, indicating that the market is already paying in advance for the violent fluctuations in the future. The flow of funds is also very clear:Retreat from risky assets and concentrate on safe-haven assets。

But at this point, what the market really cares about is no longer "whether there will be bad news later", but-Have these risks been included in the price by everyone in advance?When stocks, bonds and exchanges fall together and emotions are concentrated, panic itself often peaks before fundamentals. This rapid rise in VIX is more a concentrated release of sentiment and hedging demand than a continued deterioration of long-term systemic risks. Because of this, at this stage, instead of continuing to chase volatility upward, it is better to start thinking in the opposite direction:An opportunity to short the VIX may be brewing。 Once the risk enters the game and digestion period, the policy expectation gradually becomes clear, and the room for implied volatility to fall is often more cost-effective than continuing to rush up.

VIX Put Strategy (Short Volatility)

1. Strategy structure

Investors in$S&P 500 Volatility Index (VIX) $PUT optionsBuild aOne-leg put option (Long Put)Strategy. The strategy is essentiallyDirect bets on volatility pullback, belonging toLimited losses, higher theoretical returnsThe strategy is suitable for use when judging that the market panic has peaked in stages and the VIX has room to fall.

• Buy 1 copyVIX Put with Strike Price K = 20

• Payment premium$1.5/point

This Put is a near-at-the-money or slightly out-of-the-money option, which has high sensitivity (Delta) to the downward trend of VIX.

When market sentiment cools down and implied volatility falls, the value of this option will rise significantly, which is the main source of profit for the strategy.

2. Initial input cost

Since the VIX option contract multiplier is100：

• Premium (per point): 1.5

• Initial input cost (per contract): = 1.5 × 100 =$150/contract

👉 The cost is the policy'sMaximum possible loss。

3. Maximum loss

The largest loss occurs whenVIX expiration price ≥ 20In case of:

• Put option expiry out of the money

• Option value returns to zero

Maximum loss:

• Per point: 1.5

• Per contract:$150

📌 Conditions of occurrence:

• VIX ≥ 20 at maturity

4. Potential maximum benefits

The theoretical maximum benefit of this strategy occurs inVIX pulls back sharplyIn the case.

If it matures:

• VIX significantly below 20 (e.g. falling back to 15, 14 or even lower)

The intrinsic value of Put at maturity is:

• Intrinsic value = 20 − VIX

In theory:

• The minimum VIX can be close to 0

• Maximum theoretical return of a single contract ≈ (20 − 0 − 1.5) × 100 ≈$1,850

📈 Although extreme situations are rare, Put's profitability elasticity is very impressive during the rapid ebb of panic.

5. Break-even point

The strategy has only one break-even point:

Breakeven point: = Strike price − premium = 20 − 1.5 =18.5

Maturity judgment rules:

• VIX < 18.5 → Profit

• VIX = 18.5 → Neither profit nor loss

• VIX > 18.5 → Loss

6. Risk and return characteristics

• Maximum loss: $150/contract (limited, manageable)

• Maximum gain: Theoretically higher (when the VIX drops sharply)

• Profit and loss structure:

  • Small probability big return

  • High probability of small loss

• Direction attribute:Clearly bearish on volatility

7. Strategic characteristics and applicable situations

Strategy Characteristics

• Short VIX directly, the logic is clear

• Risks are completely controllable, no margin call issues

• Highly sensitive to "panic peaks and emotions fall back"

• Don't rely on the rise of S&P, only rely on the decline of volatility

Applicable situationsWhen investors judge:

• Market panic has been fully priced in

• VIX surged short-term due to unexpected events

• Subsequent risks enter the game and digestion stage

• Volatility existsMean reversionHigh probability path of

👉 Against the above background,BUY VIX 20 PutIt is a short-selling volatility strategy with simple structure, pure logic and clear risk upper limit.