One of the Lowest Risk Trades Out There: VIX Long

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Regression channels are a very powerful tool for entry and exit points on assets. Unlike human-drawn lines and channels, they are not subject to biases and attempts to fit price behavior into questionable systems like Elliot's Wave.

I decided to use /VX (Current Continuous) rather than spot VIX since /VX is actually what's used to settle your options on VIX (as VIX itself cannot trade, although /VX can as a futures contract). VIX also does not have volume data while /VX does. You can also purchase /VX directly or its smaller cousin (/VXM) for about $1200 per Contract.

We've formed two touches on the bottom of the descending channel on bullish RSI divergence. The Money Flow Index also shows some kind of bullish divergence too (since /VX is a futures contract, volume-based indicators can be used). Regression channel theory likes to go long at the bottom of the channel and short at the top. I've done a few trades so far like this, and they've all gone somewhere. No trade is risk free, but unless you screw yourself with short-dated options, your odds of making money on this one have to be quite high.

SPY is also hitting the top of its own well-formed regression channel, which fits this trade quite nicely.

snapshot
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27.8 is the top of the channel.
Chart PatternsTechnical IndicatorsTrend AnalysisVIX CBOE Volatility Index

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