Tariffs, Trump, Tumult: How To Trade The Volatility Surge

The stock market just got a fresh jolt of turbulence, and traders are buckling up for more. Monday's rollercoaster session saw the S&P 500 index wipe out a staggering $1.5 trillion in value as trade war fears reignited.

ETFs tracking the index closed lower: the SPDR S&P 500 ETF SPY closed lower by 1.75% while the Vanguard S&P 500 ETF VOO and the iShares Core S&P 500 ETF IVV were down 1.72% on Monday close.

Related: Markets Tank After Trump Confirms More Tariffs: Here’s What Wall Street Is Saying

With tariffs on Canada, Mexico and China ramping up, volatility is officially back in business. The VIX has surged over 33% over the past month:

Chart source: Google Finance

But for investors, chaos breeds opportunity – if you know how to play it.

1. The VIX Is Screaming – Use It

The Cboe Volatility Index ($VIX) is Wall Street's fear gauge, and when it spikes, traders take notice. With uncertainty surging, options-based strategies become lucrative.

Investors can hedge against further market swings with the ProShares Ultra VIX Short-Term Futures ETF UVXY or the iPath Series B S&P 500 VIX Short-Term Futures ETN VXX.

But beware—these are short-term tools, not long-term holds.

2. Play Defense With Broad Market ETFs

When markets get rocky, smart money often rotates into low-volatility and defensive plays.

The Invesco S&P 500 Low Volatility ETF SPLV offers exposure to less turbulent stocks, while the iShares MSCI USA Minimum Volatility ETF USMV helps cushion the downside.

For those who expect more fireworks but want to stay long equities, the SPY remains a solid way to ride out the storm.

3. Don't Fight The Tape – Trade Trends

With uncertainty swirling, trend-following strategies gain an edge. Investors looking for short-term gains might consider the ProShares Short S&P 500 ETF SH for bearish exposure or the ProShares UltraPro Short S&P 500 ETF SPXU for amplified downside bets.

Meanwhile, gold, often a safe-haven asset, is seeing renewed interest through ETFs like SPDR Gold Shares GLD.

With Trump hinting at more "big" announcements by Wednesday night, expect the volatility train to keep rolling. The question isn't whether markets will move – it's whether you're ready to trade the storm.

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