When the VIX Spikes, Sell Premium: A Tactical Guide to Volatility Income

by Chris Pulver | Apr 2, 2025

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When the VIX Spikes, Sell Premium: A Tactical Guide to Volatility Income

There’s one chart I keep an eye on when markets get messy — the VIX. When it spikes above 20, it’s not just fear in the air. It’s opportunity.

You don’t need to predict the direction of the market. You just need to understand what the VIX is really telling you. It’s a measurement of implied volatility — the price traders are willing to pay for options. And when that price surges, the edge flips to the seller.

In other words, when the VIX is above 20, it’s time to sell premium.

Why Elevated Volatility Is Your Friend

Most traders fear volatility. I look for it. When the VIX is hovering in the teens, premium is cheap and you’ve got to pick your spots carefully. But once the VIX clears 20 — and especially when it pushes 25 or higher — you can structure high-probability trades with wide breakeven levels.

I’m not saying throw darts. I’m saying sell defined-risk spreads or broken wing butterflies where the math is in your favor. High volatility expands premiums.

If you’re selling those inflated options and the market stays within your range — or even drifts sideways — you collect. The longer it takes for that volatility to cool off, the more theta works in your favor.

We’ve seen this recently with indexes like the S&P 500 (SPY) and Nasdaq 100 (QQQ). The market dips, fear spikes, and the VIX jumps. Meanwhile, technical support levels start to hold, and sentiment gets stuck in limbo.

That’s when I start looking at bull put spreads or neutral butterflies that give me plenty of room for error.

It’s Not About Picking Tops or Bottoms

You don’t need to catch the exact top in volatility. You just need to be on the right side of the curve. The VIX doesn’t stay elevated forever — it’s mean-reverting by nature. That’s why option sellers who step in when volatility is high and fade the fear often come out ahead.

Just remember: Selling premium in high-vol environments isn’t about being aggressive — it’s about being smart. You want defined risk, good credit and setups that match your market bias or keep you neutral. And if you’re managing your capital wisely, a few winners can offset a lot of chop.

Bottom line: When the VIX spikes, don’t panic. That’s when the best setups show up. Let everyone else chase headlines — you can sell the fear and get paid for it.

I’ll see you in the markets.

Chris Pulver
Chris Pulver Trading

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