Market Volatility Often Spikes in Autumn—Here’s How to Prepare

Autumn isn’t just for falling leaves—markets have a habit of dropping, too.

• Market volatility has historically risen in September and October, and with the VIX subdued through summer 2025, investors may want to prepare for a shift.

• Potential catalysts for autumn volatility include tariff policy, ongoing geopolitical conflicts, and lingering uncertainty over the Fed.

• Several ways to prepare include reducing risk, adding hedges, or taking tactical downside positions—and by applying one, or combining several, investors may be better prepared to navigate a potential spike in volatility.

Markets rarely follow a script, but one seasonal pattern stands out: volatility tends to rise as summer gives way to autumn. September and October have long carried a reputation for turbulence, a narrative often echoed in the CBOE Volatility Index (VIX).

Volatility has been relatively subdued this summer, with the VIX mostly holding below 20 since the spring selloff. Back in April, tariff headlines from the Trump administration rattled global markets, triggering a sharp drop in stocks. Equities only regained their footing after Trump announced a “pause” on the tariffs to allow for continuing trade negotiations.

No one can say with confidence what the next spark will be, but history suggests traders should not dismiss the possibility of higher magnitude swings this fall. As highlighted in the graphic below, September and October are traditionally the most volatile months on the calendar, and there's no reason to think things will be any different in 2025. 

Preparing for an uptick in volatility

If markets grow more unsettled this fall, investors don’t have to be reactive—they can position themselves ahead of time. There are several approaches worth considering to prepare in advance. One involves reducing risk—paring back positions that have grown too large, taking profits, or rebalancing to keep exposure aligned with long-term goals. 

Another approach centers on hedging, using tools such as VIX calls, index shorts, or covered calls to help cushion against sharp market swings. A third is more tactical—deploying positions that are designed to profit if the market moves lower. 

Each approach comes with its own trade-offs, and none are one-size-fits-all. Depending on an investor’s unique outlook and tolerance for risk, these three approaches can be applied individually, or combined. In the sections below, we outline each in greater depth.

Reducing Portfolio Risk

One of the most practical ways to get ahead of autumn volatility is by trimming risk before it arrives. That can start with a simple review of position sizes. When a single stock or sector grows disproportionately large within a portfolio, it can dominate overall performance—magnifying gains when things are good, but also losses when the tide turns. Paring back those outsized holdings helps restore balance and reduces the chance that one position dictates the outcome of an entire portfolio.

Sometimes, taking profits can be another prudent approach. Markets have delivered strong gains in certain sectors over the past year, and it’s easy to let winners ride indefinitely. But harvesting gains in those names can provide a cushion against potential drawdowns, while also freeing up capital that can be redeployed if a correction materializes. In short, turning paper gains into real ones before conditions shift.

Lastly, investors can rebalance the overall portfolio. For instance, if a target allocation was set at 60% stocks and 40% bonds, but months of tech outperformance have pushed equities to 70%, rebalancing can bring the mix back in line. This step not only trims exposure to sectors that may be overheated, it also reinforces discipline—helping ensure allocations stay consistent with an investor’s long-term outlook and tolerance for risk.

Taken together, these steps don’t require an overhaul of strategy—just measured adjustments that help keep a portfolio resilient when volatility returns.

Hedging the portfolio

For investors who want to stay invested while guarding against surprises, hedging offers a practical middle ground. One approach is using volatility products like VIX call options. Since the VIX often spikes when markets fall, a small allocation to calls can serve as a form of insurance, gaining value when portfolio holdings come under pressure. The key is scale—hedges don’t have to be large to make an impact. Even a modest position can ease the sting of sharp drawdowns, providing both financial protection and peace of mind.

Another approach is to establish a short position in the broader market, such as through S&P 500 futures or inverse ETFs. The size of the hedge is important—too small and it won’t offset much risk, too large and it could undo the gains from the rest of the portfolio. The goal is proportionality, aligning the hedge with the level of downside exposure one wants to cushion against. 

Not all hedges require betting against the market. Investors with concentrated stock positions can also look to covered calls. By selling calls against their holdings, they generate premium income that helps offset losses if the stock pulls back. The trade-off is capped upside beyond the strike price if the stock continues to rally, but in return, investors gain a partial buffer on the downside, and a way to turn volatility into income.

Positioning for Opportunity

Some investors focus on reducing risk or adding protection, while others take a more aggressive path—placing trades that stand to profit if markets fall. These positions aren’t about defense but conviction, aiming to capture returns directly from downside moves. 

One avenue is call options on the VIX. Because the index tends to surge when markets come under stress, these calls can capture gains from abrupt spikes in volatility. They resemble hedges in their link to market turbulence, yet differ in intent—structured to profit if volatility accelerates rather than merely offset losses elsewhere in the portfolio.

Another approach is to lean bearish on equities—shorting the S&P 500 through futures or ETFs, or buying long puts on major indexes. A short position gains when the market declines, while puts provide the right to sell at a set price, with risk limited to the premium paid. Both strategies can profit if stocks retreat, but they demand careful sizing and timing, because markets can stay resilient longer than anticipated.

Takeaways

The central distinction among the approaches outlined above is intent. Rebalancing and hedging serve as defensive tools—focused on managing risk and cushioning against losses. Speculative downside trades, by contrast, are offensive in nature—structured to profit directly when volatility rises. For investors comfortable with the added risk, these speculative bets can potentially turn seasonal uncertainty into opportunity.

Importantly, the above approaches can also work in tandem. Rebalancing trims risk, hedging adds protection, and tactical trades create the chance to profit if markets weaken. No matter which approach is used—or whether they are combined—they can help build resilience while keeping investors engaged in their core positions. During a season when volatility traditionally rises, that balance between participation and protection can be especially valuable.

Andrew Prochnow has traded the global financial markets for more than 15 years, including 10 years as a professional options trader.

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