VIX Trading Strategy For The S&P 500

Jun 16, 2026

∙ Paid

Today, we look at a VIX trading strategy for the S&P 500.

Most investors watch the S&P 500 through the lens of price: new highs, sharp pullbacks, moving averages, and daily percentage moves. But beneath every rally and selloff sits another market quietly telling its own story: the options market.

That story is often summarized by the VIX, commonly known as Wall Street’s “fear gauge.”

While SPY tracks the performance of the S&P 500 through one of the world’s most heavily traded ETFs, the VIX reflects the market’s expectation of future volatility. In other words, SPY tells us what has happened to stocks, while the VIX gives us a glimpse into how nervous, or complacent, investors are about what may happen next.

The relationship between VIX and SPY is not perfect, but it is important. When SPY falls sharply, the VIX often spikes as traders rush to buy protection.

When SPY trends higher in a calm market, the VIX usually drifts lower. This inverse relationship has made the VIX one of the most followed indicators among traders, risk managers, and market commentators.

Let’s backtest a strategy that trades the S&P 500 but is based on VIX readings: