The U.S. government shutdown is creating market uncertainty, but volatility remains low. The CBOE Volatility Index ($VIX) is currently near 16, below its long-term average. Despite ongoing shutdown, tariff concerns, and Federal Reserve signals, market risk is being priced calmly. VIX spiked above 50 earlier in 2025 due to global market jolts.

Historically, the VIX has a negative correlation with major stock indexes. When S&P 500 drops, VIX rises as traders seek protection. VIX can be used for speculation or hedging through options and futures. Long VIX call positions can act as insurance in a market downturn. Strategic expiration date alignment is crucial for these positions.

Approaching the market depends on outlook. For those expecting calmness, bullish volatility positions may not be ideal. But for those anticipating turbulence, long VIX calls or short VIX puts could be beneficial. Different risk profiles exist for each strategy. With stock market near all-time highs, a timely long VIX call could serve as a tactical trade or hedge during potential market pullbacks.

Read more at Barchart: Wall Street’s Fear Gauge Is Eerily Quiet Despite the Government Shutdown. Here’s 1 Options Trade That Could Pay When It Wakes Up.