About this Video

• Video Title: What trading signals you can see from the VIX
• Channel: Yahoo Finance
• Speakers: Jared Blickery
• Duration: 00:03:34

Introduction

This Yahoo Finance video by Jared Blickery explains a simple trading system based on VIX (Volatility Index) surges. The video analyzes historical data to determine the effectiveness of using VIX spikes as a trading signal for the S&P 500.

Key Takeaways

• A VIX surge above 45, followed by a close below 30, historically signals potential long-term gains in the S&P 500.
• Short-term (one week) returns using this strategy are negative and unreliable.
• Longer-term holds (one month, one quarter, six months, one year) show significantly improved median returns and a higher percentage of positive outcomes.
• Buy-and-hold strategies generally outperform attempts to time the market based on immediate VIX spikes.
• A similar analysis by BFA, which bought on the VIX spike without waiting for a close below 30, also yielded positive results in the long term (six months).

The transcript provides the following median returns:

• One week: -1.2%
• One month: 1.6%
• One quarter: The exact number isn't explicitly stated, but it's described as an improvement over the one-month return and still maintaining a 73% positive outcome.
• Six months: 13.6%
• One year: Approximately 20%