Time to Buy Protection!

We decided to enter a complex spread position on the VIX today to buy protection for the next month. We bought to open the March $21 call ($2.00) and sold the March $25 call ($.90) for a net debit spread of $1.10. We sold the call with the higher strike price in an effort to offset the cost of this insurance, in other words to lower our entry cost. The most that we can lose on this position is our entry cost of $1.10 per share. However, if volatility rises sharply prior to the March expiration, we could make as much as $4 per share less the entry of cost of $1.10. All in all, we are able to buy protection for the next month at a reasonable price and will have significant protection if volatility does spike again. We saw a significant short term spike in volatility during February so we could certainly see that again in March. There are a number of sources that could bring volatility back to the market, including the recent FED action over raising a key interest rate. The best time to buy protection is when volatility is relatively low and premiums are more reasonable.