Latest / The Day Trading Podcast with Fexingo: Active Trading, Charts, and Short-Term Market Strategy / Day Trading the VVIX Volatility of Volatility
Transcript
- Lucas: So it's June fourth, 2026, and I want to talk about something that's been nagging at me the past few days — the VVIX. The volatility of the VIX itself. Luna: Right, because the VIX is already up over six percent in the last five days, sitting around sixteen point two eight. And the VVIX is up even more — four point four percent to about eighty-nine point eight. Lucas: Exactly. That gap, the spread between VIX and VVIX, is what I want to drill into. Typically, when VVIX rises faster than VIX, it's a sign that options dealers are pricing in more uncertainty about where volatility itself is headed. It's like the market is bracing for VIX to make a big move — either spiking or collapsing. Luna: And for day traders, that means the character of your trades might need to shift. Lucas: Yeah. And before we go deeper — if this kind of concrete market analysis is helping you think about your trades differently, that's exactly why we keep this show ad-free. Listener support is what makes that possible — you can find it at buy me a coffee dot com slash fexingo. Just a way to keep the lights on, no pressure. Luna: Totally. It's a small gesture that goes a long way for us. Lucas: Okay, so back to VVIX. The thing is, the VIX at 16 isn't extreme. It's above its long-term median around 15, but not alarming. But the VVIX at 89.8 — that's in the 80th percentile historically. That's the kind of level we saw before the VIX made a ten-point swing in either direction. Luna: So what's the actionable signal for a day trader? Are we expecting a volatility spike soon, or a collapse? Lucas: That's the million-dollar question. The VVIX doesn't tell you direction — it tells you magnitude. When it's this elevated, the probability of a large VIX move in the next couple weeks increases significantly. So as a day trader, you want to be ready for either a big volatility expansion — which usually means a sharp sell-off — or a compression, which could mean a fast rally. Luna: And that's where position sizing comes in. If you're trading stocks or options, you probably want to size down until you see which way the wind blows. Lucas: Exactly. I've been cutting my share sizes by about a third in the last two days. Not because I'm bearish — I'm just acknowledging that the market could whip around violently, and I don't want to be overextended when it happens. Luna: There's also an options play here, right? You can trade VIX options or futures directly to profit from the volatility itself. Lucas: Yeah, but that's not for everyone. If you're comfortable with VIX options, you can buy calls or puts on VIX depending on your view. But more commonly, day traders use this signal to adjust their approach to individual stocks. When VVIX is high, I look for stocks that have their own elevated implied volatility — that's where you might get a gamma squeeze if the stock moves. Luna: Right, because the options market is already pricing in big moves, so if the stock actually does move big, the gamma can amplify the move. Lucas: Exactly. So I'm scanning for stocks that have seen a spike in their 30-day implied vol over the last week. Names like Broadcom and CrowdStrike — they were moving after hours yesterday, and their options vol is elevated. Those are the kind of names where, if the broader market stays calm, they could still see big intraday swings. Luna: And what about the small-cap side? The Russell 2000 is down one and a half percent in the last five days — that's a bigger drop than the S&P or Nasdaq. Could the VVIX signal be especially relevant for small-cap day traders? Lucas: Very much so. Small caps are more sensitive to volatility shifts. When VVIX is high, small-cap beta tends to amplify moves — both up and down. So if you're day trading small caps, you should be even more cautious with size. A one percent move in the Russell could easily be a three percent move in your small-cap stock. Luna: So the key takeaway is: VVIX is flashing yellow, not red. It's a warning to tighten risk management, not to panic. Lucas: Exactly. I'd say the next few trading sessions are going to tell us whether this was just a noise spike or the beginning of a regime change. If VIX starts moving toward 20, we're in a different environment. If it drops back to 14, then the VVIX will likely fall too, and we can go back to normal sizing. Luna: And either way, day traders who pay attention to this signal are ahead of the crowd. Lucas: That's the edge. Most retail traders don't even know what VVIX is. So by keeping it on your radar, you're already making better decisions about when to push and when to pull back.