Now, you may be looking at the title of this article and think it’s a bit outdated. I’d also agree.

Back in March, I wrote this article to help traders better navigate mixed macro environments. But now? It definitely seems we’re on track for a recession. 

Today (April 7th) was looking to be a historically horrible day for the markets. Instead, we’re witnessing a wild-child market, swinging up and down faster than an Aaron Judge torpedo bat. 

Here’s the mix:

The job market is still strong—we saw 303,000 jobs added in March, blowing past expectations of 200,000. Inflation is cooling for now, but that all may change with the “Liberation Day” tariffs. We’re also seeing a pullback in consumer spending, choppy earnings, and a whole lot of hesitation under the surface. 

Those were, for the most part, the mixed part of the macro situation. A bloody mary economy. But now? It seems the bartender skipped out on the good stuff.

(I guess that extra Vitamin C is the “medicine” President Trump mentioned on Sunday.) 

The S&P 500 is dropping to new lows, nearly -17.5% below its all-time highs. The same can be said for the Dow Jones (-14.8%) and the Nasdaq (-22.1%).

That’s the world we’re trading in right now. 

Most stock investors are bleeding right now but fortunately, my day job revolves around options trading. And while this environment is wackier than I’ve seen it since COVID times, I do know that if you position around volatility and risk, you can trade profitably.

First, let’s go back in time to late March and discuss a trade setup that many traders missed out on. It all revolves around the “fear gauge,” also known as the VIX.

What the Market Was Pricing In (and What It Wasn’t)

Written on March 25th:
Even with all the uncertainty in the economy and markets, the VIX — the market’s fear gauge — is sitting near multi-year lows. That tells me one thing: the market is likely underpricing risk.

We’ve had multiple CPI reports, Fed decisions, and macro surprises that barely moved the needle. Volatility was expected… but it didn’t show up in price action.

As you can see, “fear” sentiment spikes in correlation with what’s happening in the economy and markets. 

2008 Financial Crisis: The VIX spiked past $70.

2020 COVID Crash: The VIX hit past $66. 

Meanwhile, the VIX is now dropping after passing $23. Why is the VIX not reaching newer heights, similar to what we saw in 2008 and 2020? 

Flashforward to April 7th: 

It eventually did. The VIX is now trading over $50—the highest it’s been since the 2020 COVID crash, and before that, the 2008 Financial Crisis. I don’t want to brag, especially right now as people’s portfolios bleed out, but I was dead on the money here. A few reasons why this was: 

• Markets were complacent. Despite clear warning signs, volatility was underpriced. The VIX was near multi-year lows even as economic tension built.
  
• The severity of the tariffs caught everyone off guard. Traders expected tough talk — not sweeping, multi-front trade restrictions.
  
• The narrative flipped overnight. Panic spread not just because of the policy shift, but because respected voices — economists, hedge fund managers, even Bill Ackman — publicly turned on the administration’s approach.
  
• Liquidity dried up fast. As volatility surged, risk models blew up, and market makers widened spreads — accelerating the drop and driving the VIX even higher.

But First… The Basics to Trading the VIX

Volatility isn’t just background noise—it’s a tool. It tells us what traders are pricing in, where the market sees risk, and how we might take advantage of dislocations.

Here’s what I’m watching:

• VIX term structure: When it’s in contango, markets are calm. When it flips to backwardation, stress is building. In March, we were (for the most part) still in contango. This is when there was an excellent opportunity to buy calls on the VIX. But now? It’s in backwardation, which I will explain shortly
  
• VVIX is the volatility of the VIX — when this spikes, it often precedes VIX movement. It’s like watching options traders trade fear itself. If VVIX jumps while VIX stays flat, someone’s preparing for a move.
  
• Put Skew tracks how expensive puts are relative to calls. When skew rises, it signals demand for protection — often a sign of behind-the-scenes fear. Traders aren’t necessarily bailing out, but they’re hedging for turbulence.

Tracking these signals in tandem helps me identify when sentiment is diverging from price — and that’s where I start looking for asymmetric volatility setups. They won’t tell you direction, but they can absolutely tell you when a market is too complacent.

So Why Wasn’t the VIX Higher Back in March?

Just a few weeks ago, this section asked why the VIX was staying low despite macro uncertainty. We now have the answer: the market was underpricing risk.

Back then, the curve was in contango — that means short-term VIX futures are priced lower than longer-dated ones. 

In simple terms, the market is pricing in calm in the near term, with maybe some concern further out. That’s typical in a stable or complacent environment. But during true stress? 

The curve flips to backwardation, where near-term contracts trade at a premium — meaning fear is front-loaded, and traders are demanding protection now.

And that’s the signal. Because while the VIX wasn’t (for the most part) flashing panic at the end of March, risk is now being priced in.

Why was that? Well here’s what I wrote back in late March.

Written on March 25th:

Media headlines and surface-level narratives often oversimplify what’s really happening under the hood. 

Take recent macro data: strong jobs reports, softening inflation, and a resilient consumer. That sounds bullish. But dig deeper — corporate margins are tightening, credit card delinquencies are rising, and the Fed’s rate path is still uncertain. There’s fragility — it’s just not being priced into volatility.

This is the opportunity.

When implied volatility stays muted — despite unresolved macro tension — that’s where savvy traders can find asymmetric setups. It’s not about betting on doom. It’s about understanding that the risk/reward equation changes when everyone else is looking the other way.

And that’s what makes volatility your edge — not your enemy.

Flashforward to April 7th:

One thing I did not consider: the volatility of President Trump. There was no way to know what his tariff plans on “Liberation Day” would be. But now that we do, risk is being priced in, leading to backwardation.

Options Strategies for Mixed Macro Environments

Hindsight thinking: it’s more obvious than ever the opportunities we had to take advantage of the situation. Of course, though, no one can predict the future. March 25th was a mixed macro environment. Today? Not so much. 

However, this is a great lesson for next time. And I promise you, there will be a next time.

In mixed macro environments, this is where options shine. You don’t have to pick a direction. You just have to match the strategy to the environment.

Here’s how I’d think about it:

• If recession fears rise (like they are now): Consider SPX put spreads or go long straddles/strangles ahead of macro events like CPI or FOMC meetings. These setups position you for increased volatility or downside moves — especially if the market starts to price in fear after a period of calm.
  
• If the market holds up: I like debit call spreads on momentum names — especially in tech. When implied volatility (IV) is elevated, selling bull put spreads can also work well. You’re taking a directional bet, but with a defined risk profile that benefits from stable-to-bullish movement.
  
• If we chop sideways: This is where iron condors on SPY or QQQ can collect premium in range-bound markets. Calendar spreads are another go-to when IV is low but a known catalyst is approaching — like an earnings announcement or Fed speech.

Regarding recession fears rising, the key here is that volatility was cheap, and if you’re right about the market repricing risk (say, due to a President going on National TV right as the markets close, only to announce the harshest global trade policy since Herbert Hoover), you can be sitting on a high-reward, low-cost setup.

These strategies benefit not just from a directional move, but from the expansion of implied volatility — what most traders miss.

When implied volatility (reflects the market’s expectations for future movement in a stock or index) is priced too low — and the potential for a big move is real — the reward-to-risk on volatility-based strategies can be incredibly compelling.

Options with higher IV cost more — because there’s more potential movement priced in. Lower IV means options are cheaper, but you may get less movement.

The opposite is true for when we’re in backwardation. It’s during these moments you want to get out when the going is good. Volatility is expensive and could likely decrease as fears calm.

While I cannot say if the time is now to get out on the VIX — markets could easily keep tanking — we’re definitely entering “full go” territory for traders looking for big profits.

Important: Track IV Rank No Matter the Situation

Before you enter any options trade — especially in a mixed macro environment — it’s critical to know whether options are cheap or expensive. That’s where IV Rank comes in.

What is IV Rank?

IV Rank tells you where the current level of implied volatility stands relative to the past year. 

For example:

• If a stock’s IV has ranged between 20% and 60% over the past 12 months, and today’s IV is 40%, the IV Rank is 50.
  
• If IV is near its low end, IV Rank is low (0–30).
  
• If IV is near its high end, IV Rank is high (70–100).

It’s like a cheat sheet to know if options are cheap or expensive compared to their own history.

And right now? IV Rank is pinned near extremes. That means you’re paying a premium for volatility — which changes the entire playbook.

Here’s how I’d adapt:

• High IV Rank (70–100): Options are expensive. That’s your cue to consider selling volatility — iron condors, credit spreads, or defined-risk naked positions.
  
• Medium IV Rank (30–70): Neutral strategies still work — calendars, diagonals, and low-cost debit spreads.
  
• Low IV Rank (0–30): That’s your moment to buy volatility — long straddles, strangles, or long calendars ahead of catalysts.

The key now is not just recognizing IV Rank — but knowing when it flips from a buy signal into a sell setup. I cover this more in depth in my education courses and Live Signal Rooms (you know, the place where traders like yourself learn and trail my trade setups in real-time).

Managing Risk in Volatile Times

This part is non-negotiable. You don’t survive long in volatile markets without discipline and a risk management plan. 

Right now, we’re in one of those markets. Volatility is here — not approaching. That means the downside is real, the swings are violent, and discipline isn’t optional — it’s the whole game.

Here are a few core rules I live by and teach every trader in our room:

1. Smaller size, tighter spreads — especially when the environment is uncertain

When volatility rises, so does potential reward — and potential risk. That’s not the time to bet the farm.

Trade smaller. Focus on high-probability setups. Use tighter bid/ask spreads so you’re not giving away edge just by entering the trade. In high-IV regimes, the market moves enough on its own — you don’t need big size to see gains.

2. Commit to defined-risk trades whenever possible

Especially when IV is high or direction is unclear, I favor trades where maximum risk is known upfront. As a guide to my students, I ALWAYS USE DEFINED-RISK TRADES (please note the caps for emphasis).

Examples:

• Vertical spreads
  
• Iron condors
  
• Debit spreads
  
• Butterflies
  

These structures give you exposure to the move — without blowing up your account.

3. Use your Greeks

The Greeks aren’t optional — they’re how you control the position.

• Delta tells you directional bias
  
• Gamma tells you how fast your delta changes (especially important around earnings or catalysts)
  
• Vega shows sensitivity to changes in implied volatility
  
• Theta tells you how time decay is helping or hurting your trade

If you don’t understand how your position will behave if nothing happens or if volatility changes, you’re not trading — you’re gambling.

4. Beware IV crush after known events

A lot of traders lose money even when they get the direction right. Why? Because they ignored the IV crush.

After a big event like earnings, FOMC, or CPI, implied volatility tends to collapse — even if the stock or index moves in your favor. That hurts long premium trades like straddles or naked options.

Always ask: Is the event already priced in? If the answer is yes, you may want to wait — or choose a trade structure that takes advantage of that IV collapse, like credit spreads or calendars.

5. Don’t try to chase every move. Sit on your hands when needed.

Sometimes, the best trade is no trade. Essentially… DON’T GET CAUGHT UP IN FOMO.

Today, for example, I told my students to keep calm and stay as far away as humanly possible from their trading accounts.

If the setup isn’t there, if volatility is already priced in like it is now, if the markets are on a bender of up-and-down proportions, or if you just made a big win or loss — step back. Recenter.

A disciplined trader knows when to be aggressive and when to preserve capital. That’s what keeps you in the game for the long haul.

What to Watch Going Forward

Here’s how I prep every week:

• I start by looking at the economic calendar — CPI, PPI, Fed speeches, and jobs reports go right into my trading plan.
  
• I track IV rank across sectors using my platform — if something looks out of place (e.g., energy with low IV but high realized vol), I dig in.
  
• I watch earnings IV vs. realized earnings moves — if the options market is mispricing it, there’s usually a setup.
  

This is the lens I bring into every trade: Where is risk being underpriced? What is everyone ignoring? That’s where opportunity lives.

Turn Volatility Into Opportunity

Here’s the thing: you don’t need to predict the market — you just need to know how to position around it. Volatility is a signal. Risk is manageable. And the best trades come from setups others ignore.If you want more real-time trade ideas and the exact volatility strategies I use — especially in these markets of mayhem — I break everything down inside my Options Volatility Program, with live setups and daily education.