Correction protection: Where to hide right now

A trader on the floor of the New York Stock Exchange, Jan. 7, 2015.
Brendan McDermid | Reuters
A trader on the floor of the New York Stock Exchange, Jan. 7, 2015.

U.S. stocks posted their worst first four days to start a year ever. If this vicious sell-off continues, where can investors preserve capital?

Traders don't watch the Dow Jones industrial average when gauging the amount of fear in the marketplace. They look at the CBOE Volatility Index, also known as the VIX.

On Thursday, volatility traded at around the 25 mark, an extreme level last seen during the market swoon last summer.

Read More How bad? Strategist says up to 25% drop ahead

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