OF What do you make of this analysis?
Disclosure - I am long VXX (if only for a couple days}.
http://seekingalpha.com/article/732231-volatility-players-it-s-time-to-buy?source=yahoo
Follow posts
Myself and Janosk are both trading a strategy being long XIV, long VXZ, favoring XIV in size.
Today I saw very little loss as VXZ increased after I sold XIV yesterday, the idea is that over the long-haul XIV's inverse decay will add value while I still make short term trades around a base.
But since a correlation exists (based on the fact that you guys are trading it), it may be something to look into.
There are periods where that correlation breaks, sometimes it lasts months, but not very often - and when that correlation breaks, it always reverts to the mean, meaning it presents occasional arbitrage opportunities.
Don't take my word on it, here's a 6 month, 3 year and 5 year chart of both,
VXX is green, VXZ is red -
6 month
3 year
5 year
Time to Buy? Already?
Displaying entries 1 - 20 of 23 forum posts in total
12
get long vol. stay long vol.
On the article: What he calls "contango", I call "time premium". It's natural for the cash VIX to be lower than the VIX futures.
I agree the VIX is relatively low. And I agree with the political clouds on the horizon, it should be moving higher.
My preferred way to play the VIX is to choose long IV option positions on indexes and equities. For example, recently, I've been favoring Calender and Diagonal Spreads over Credit Spreads and Condors.
I agree the VIX is relatively low. And I agree with the political clouds on the horizon, it should be moving higher.
My preferred way to play the VIX is to choose long IV option positions on indexes and equities. For example, recently, I've been favoring Calender and Diagonal Spreads over Credit Spreads and Condors.
Took profits on my VXX short - XIV, at $13.35 late yesterday, added them back today @ $12.50 and I'm hoping it goes lower so I can buy more.
Doug describes why I will never be long VXX, it spends 80% of the time in contango - guaranteeing constant decay..
Instead, I keep my fingers crossed that it gets to backwardation to give me buying opportunities at a discount.
I was buying XIV a year ago below $5 a share, have been trading around a base since.
Doug describes why I will never be long VXX, it spends 80% of the time in contango - guaranteeing constant decay..
Instead, I keep my fingers crossed that it gets to backwardation to give me buying opportunities at a discount.
I was buying XIV a year ago below $5 a share, have been trading around a base since.
Maybe a good call Incubus. Contango between the first month and spot price of VIX is pretty large. Something about to happen? Or go time to go long XIV?
I should have given more detail.made to trade said: Maybe a good call Incubus. Contango between the first month and spot price of VIX is pretty large. Something about to happen? Or go time to go long XIV?
Myself and Janosk are both trading a strategy being long XIV, long VXZ, favoring XIV in size.
Today I saw very little loss as VXZ increased after I sold XIV yesterday, the idea is that over the long-haul XIV's inverse decay will add value while I still make short term trades around a base.
Interesting, currently I'm trading around the first two months. I haven't looked into the 5th month yet but eventually will do so. I just find it hard to believe that a 5th month VIX future will increase if the spot VIX increases by a little. The VIX can go from 16, to 30, and back to 16 in 2 months, so anything that happens today, isn't likely to affect the price of something that's set to expire in 5 months. In other words, I don't know how much I'd trust a 5th month hedge vs. a 2nd month hedge.incubus said:
I should have given more detail.made to trade said: Maybe a good call Incubus. Contango between the first month and spot price of VIX is pretty large. Something about to happen? Or go time to go long XIV?
Myself and Janosk are both trading a strategy being long XIV, long VXZ, favoring XIV in size.
Today I saw very little loss as VXZ increased after I sold XIV yesterday, the idea is that over the long-haul XIV's inverse decay will add value while I still make short term trades around a base.
But since a correlation exists (based on the fact that you guys are trading it), it may be something to look into.
VXZ has a beta of 1/2 VXX, VXX moves twice as much in either direction and almost always moves in unison, with periodic exceptions.made to trade said:
Interesting, currently I'm trading around the first two months. I haven't looked into the 5th month yet but eventually will do so. I just find it hard to believe that a 5th month VIX future will increase if the spot VIX increases by a little. The VIX can go from 16, to 30, and back to 16 in 2 months, so anything that happens today, isn't likely to affect the price of something that's set to expire in 5 months. In other words, I don't know how much I'd trust a 5th month hedge vs. a 2nd month hedge.
But since a correlation exists (based on the fact that you guys are trading it), it may be something to look into.
There are periods where that correlation breaks, sometimes it lasts months, but not very often - and when that correlation breaks, it always reverts to the mean, meaning it presents occasional arbitrage opportunities.
Don't take my word on it, here's a 6 month, 3 year and 5 year chart of both,
VXX is green, VXZ is red -
6 month
3 year
5 year
I was going to initiate a short position but I decided I will wait and do it after Tuesday (Apple's earnings). That could be a big surprise either direction.
Simple, I just made this point on the "XIV" thread.
There is a stronger-than-usual likelihood that VXX will rise.
The problem, if it takes two months for that to happen, you lose your shirt in roll decay, the "wall of worry" that causes more buying of further out VIX futures than near-term.
My take, it's just better to wait for sizable spikes in VXX to start cost averaging a position than to try to time future events and risk big losses in decay while you wait.
There is a stronger-than-usual likelihood that VXX will rise.
The problem, if it takes two months for that to happen, you lose your shirt in roll decay, the "wall of worry" that causes more buying of further out VIX futures than near-term.
My take, it's just better to wait for sizable spikes in VXX to start cost averaging a position than to try to time future events and risk big losses in decay while you wait.
Incubus, sorry I didn't clarify. I was thinking about buying SPY puts. I don't plan trading VXX. I rather trade ultrashort or 3x bear ETFs. Trading SPY is probably the least risky right now with a good entry point. And that's what I'm waiting for.
Great call and hey I'm glad yo see you guys again. The markets are in trouble that's all i can say.
I'm just still waiting...but I can see it in the distance...
Still waiting and starting to lose my patience...
Simple, both Steve Leissman & Ron Insana, two of CNBC's most level headed & accurate pundits are both on the same page, the Fed will be doing something, likely sooner than later, and it's probably bigger then is expected.
That said, I'm not sure how that's going to offset a 4% sudden cut in GDP, estimated 2 million defense jobs lost from the sequester...I'm open to some thoughts on this confusing scenario.
That said, I'm not sure how that's going to offset a 4% sudden cut in GDP, estimated 2 million defense jobs lost from the sequester...I'm open to some thoughts on this confusing scenario.
It seems to me the stock market is doing okay.... little skittish.... but holding it's own...
Why pull the one and only one trigger you have when there are a lot of curtains to choose from....
a). Greece
b). Spain
c). Euro
d). Jobs
e). Global traumatic event
f). Jesus returns....
h). Republican President
i). Re-election of Obama
Why pull the one and only one trigger you have when there are a lot of curtains to choose from....
a). Greece
b). Spain
c). Euro
d). Jobs
e). Global traumatic event
f). Jesus returns....
h). Republican President
i). Re-election of Obama
How big it's going to be, or how big it is?
this big?
or this big?
this big?
or this big?
Simple, get with the program, we're talkin' at least -
Oh, that's what they are talking about...
But I think some people need more proof...
Displaying entries 1 - 20 of 23 forum posts in total
12
You must Log In to post to this forum.
Not a member? Register Now to …
- See what other traders are doing
- Make your own trades public
- Share your thoughts on a trade
- Join or start a group
- Connect with like-minded traders
