With Trump’s election odds influencing market sentiment, a missed trade on volatility using $SVXY could have yielded gains as the VIX spiked pre-election, then tapered off.
.png)
As many know, once the election started, the odds of Trump winning on sites like Polymarket were at 80%. This kind of speculative momentum often finds its way into the markets, especially through retail investors. There was a trade that many missed, which could have profited significantly if caught early on. Was it the S&P, $QQQ, or futures? No, it was a play on volatility.
While implied volatility spikes dramatically when volatility surges, it declines more gradually as market jitters subside. Carr’s analysis treats VIX movement as symmetric, but in practice, the VIX’s sharp upturns contrast with its slower declines. This distinction is key, particularly during periods of lingering uncertainty.
Now that you know this, let’s move on to the trade. Typically, the VIX spikes pre-election and then tapers off as market clarity and certainty about the next presidential election increase. This trend goes back years, with the VIX often spiking pre-election and hitting its peak just four days before Election Day. The play was to go strong on $SVXY—an inverse ETF that mirrors the VIX’s opposite moves. Investors are now watching the upcoming Thursday Fed decision on a potential interest rate cut.
