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With the upcoming election and many speculating about the validity of “sell in May and go away” this year, expect spring and summer stock market volatility to pick back up.

The VOLATILITY S&P 500 (INDEXCBOE:VIX) traded to a high of 30.90 on the market’s February lows and has since been cut by half in five weeks. If you’re going to trade stock market volatility, the IPATH SP 500 VIX SHORT TERM FUT ETN (TSE:VXX) is one of the best instruments right now.

The VXX has traded in a 52-week range of 31.48-15.48 and tested a high of 30.85 on Feb. 11. The current chart shows that a test to 18 appears likely and a drop to 15 would represent a 50% haircut off the high for the VXX, just like the VIX.

The VXX 50-day moving average is now in a slight downtrend and the 100/200-day moving averages are flat-lining. Continued closes below 18-17.50 could get the mid-teens in play on continued weakness. Resistance is at 20-21.

One of the easiest and most liquid ways to play volatility is by trading the VXX. While near-term options can be used to play a possible drop below 18, I’m also looking at longer-term options to play if the VXX moves back above 20-21.

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Weekly and monthly VXX call and put options can be used for bullish and bearish trades to trade stock market volatility, so let’s take a look at both.

The VXX April 20 puts (VXX160415P00020000) were the most active in the regular monthly April chain as they traded nearly 4,300 contracts on Friday. These puts are “in-the-money” by nearly a point and can be used to play further weakness in the VXX. These options would double from current levels, or return 100%, if VXX trades below 16.40, technically, by mid-April.

I also like the VXX April 18 puts (VXX160415P00018000) as a “cheaper” way to play the VXX. These options are more than a point “out-of-the-money” but would double if VXX trades below 17.90 by mid-April. If the market stays strong on Monday and the VXX, or VIX, is showing weakness, both aforementioned put options look like a good short-term trade.

On the flip side, bearish traders can wait for the VXX to clear 21 while targeting longer-term call options. For instance, the VXX May 19 calls (VXX160520C00019000) are slightly “in-the-money” but seem expensive at these levels with a falling VXX.

Meanwhile, the VXX May 25 calls (VXX160520C00025000, $0.90) traded an astounding 53,000 contracts on Friday versus previous open interest of under 16,000 contracts. These options are nearly 6 points “out-of-the-money” but can be used as a short-term trade if VXX clears 19.75-20 at some point down the road.

The VXX June 25 calls (VXX160617C00025000, $1.35) were fairly active on Friday as they traded nearly 1,400 contracts. Open interest is above 7,600 contracts. These options will become cheaper if the VXX continues to decline. They are a good deal when they trade for under $1.

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