Shorting the VIX at 20+ Is a Dangerous Game

by Chris Pulver | Aug 4, 2025

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This is all about chart work. I’ll break down price levels, key patterns and potential trade setups. It’s where I’ll show how I’m drawing levels and setting entries and exits based on what the market gives us.

I’ve been watching the VIX closely, and what I’m seeing should have every trader paying attention.

The VIX just spiked 25% late last week and broke above 20 — and that’s not just another number on your screen. It’s a critical threshold that changes everything for volatility suppression funds, and creates a cascade effect most traders don’t understand.

Here’s the thing about volatility funds…

They’re not built to survive when they’re trying to short the VIX at 19-20 plus. The math just doesn’t work in their favor anymore.

When we cross this level, we’re looking at a progression that can move fast. Going from 20 to 25 can certainly happen. Going from 25 to 30 can certainly happen.

And each step higher puts more pressure on these funds, forcing them to cover positions and driving volatility even higher.

The Volatility Cascade Nobody Talks About

This isn’t just theory — I’ve seen this movie before. When we get real ventilation in volatility, the VIX usually has what it takes to flush up to possibly 20, 25, 30, 35.

We’re already near the first level.

But here’s where it gets interesting. When we start to see significant outliers, we’re probably looking more in the 35 to 40 area. That’s when volatility suppression funds face existential risk.

Remember what happened earlier this year?

The VIX spiked above 60 before retreating below 35 within 30-45 days. That marked a substantial bottom in the market — but many of the funds that tried to short volatility during that spike got crushed.

How I’m Positioning for the Next Move

I’m not trying to short volatility at these levels — that’s a dangerous game. Instead, I’m positioning for the inevitable progression and looking for opportunities to sell premium at elevated levels, but with wide margins for error.

The key is understanding the mechanical forces at play. Volatility suppression funds profit from calm markets, but when volatility breaks above key thresholds, they’re forced into a feedback loop that drives prices higher.

This creates opportunities for traders who understand the pattern — both on the way up and during the eventual reversion.

Don’t try to catch a falling knife by shorting volatility at 20-plus levels. Wait for the spike, understand the progression, and position accordingly.

I’ll see you in the markets.

Chris Pulver
Chris Pulver Trading

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