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Why Day Traders Watch the VVIX-Carry Trade Now
Season 1
Episode 32
Published 2 months, 1 week ago
Description
Lucas and Luna break down the VVIX-carry trade, a short-term strategy that profits from the gap between VIX futures and VVIX hedging costs. With the VIX at 15.81 and VVIX at 85.75 — a 4.3% divergence in just five sessions — they explain how traders are using put spreads and calendar spreads to capture this volatility-of-volatility premium. Lucas walks through a concrete example: selling VIX call spreads while buying VVIX puts, with specific entry and exit rules. Luna shares a historical look at similar setups in 2023 and early 2025. They also discuss why this trade works best when the VIX term structure is in contango, and how to manage the tail risk of a sudden spike.