In the current market landscape, it seems prudent to consider strategies that can provide a hedge against potential volatility. There’s a perspective floating around that, given the confluence of various economic indicators and historical patterns, investors might want to turn their attention to volatility indices as a form of insurance against market swings.

According to this view, historical data and forecast models are pointing toward an uptick in the Volatility Index (VIX), which is often referred to as the market’s “fear gauge”. It suggests that the VIX could see an average rise in the coming month, exceeding recent projections. This is particularly interesting considering that the VIX is at what some analysts believe to be a historically low level, and the broader market is hovering near all-time highs.

The rationale behind this hinges on a blend of factors: a heightened demand for upside asymmetry as observed in the options market, alongside a series of upcoming macro and microeconomic events that could rattle the markets. Over the past three decades, the VIX has averaged an uptick in April, and the presence of these market catalysts could potentially amplify this historical trend.

With the S&P 500 index skew indicating that investors are anticipating more downside risk, there’s a belief that now may be an opportune time to utilize VIX calls as a tactical hedge. These derivative instruments become more valuable as market volatility increases, and could thus serve as an effective counterbalance should markets turn tumultuous.

From a thematic risk perspective, it’s noted that certain sectors are poised at pivotal levels, suggesting that tactical hedges for specific risks related to market or geopolitical events could be a wise move. For instance, technology stocks, often sensitive to interest rate shifts, and international relations, particularly those pertaining to China, are cited as specific areas of concern.

For those inclined to follow through on such a strategy, the recommendation would be to consider buying VIX call options with an expiration in the coming month, with a strike price that reflects the projected increase in volatility.

Trade recommendations are always subject to risk, and such decisions should be made in the context of an individual’s portfolio, risk tolerance, and investment horizon. With the Federal Open Market Committee (FOMC) meeting and the election season on the horizon, it could be especially crucial to stay attuned to the potential shifts in market sentiment.

As always, while historical patterns can provide a backdrop for understanding market dynamics, they are not infallible predictors of future outcomes. Vigilance and adaptability remain key tenets for navigating the ever-evolving financial markets.