Author Topic: Anyone play the Volatility Index?  (Read 2318 times)

Bearded Man

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Anyone play the Volatility Index?
« on: August 24, 2015, 10:16:25 PM »
VIX is up 45%. Was up more than that even. I lost money in this before, but if you had bought some today it would have been very profitable.

hodedofome

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Re: Anyone play the Volatility Index?
« Reply #1 on: August 25, 2015, 08:28:44 AM »
You can't invest directly in the VIX. There are VIX options and ETFs like VXX and XIV which somewhat track the index but not really. Look at what happens when you buy and hold VXX over time, it does nothing but go down, with a few spikes here and there.

VXX and XIV are only for trading aka market timing. I've been holding XIV for several months and it got destroyed this past week.

PaulMaxime

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Re: Anyone play the Volatility Index?
« Reply #2 on: August 25, 2015, 08:46:20 AM »
I short the VXX ETN. It's fundamentally flawed and so in general with a flat VIX it will trend downward strongly over time.  In general I only add to my short over time like yesterday when it spiked like it has.

This is a long term investment using this 'short term' instrument. You could also buy XIV or SVXY and just hold them.

You are providing a service to those who feel the need to manage short term volatility.

bacchi

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Re: Anyone play the Volatility Index?
« Reply #3 on: August 25, 2015, 09:12:51 AM »
You can buy and sell VIX futures, along with their respective futures options, on the CBOE. It's a good candidate to counter short puts. A long VIX saved me yesterday.

hodedofome

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Re: Anyone play the Volatility Index?
« Reply #4 on: August 25, 2015, 10:23:55 AM »
I short the VXX ETN. It's fundamentally flawed and so in general with a flat VIX it will trend downward strongly over time.  In general I only add to my short over time like yesterday when it spiked like it has.

This is a long term investment using this 'short term' instrument. You could also buy XIV or SVXY and just hold them.

You are providing a service to those who feel the need to manage short term volatility.

Are you able to consistently find shares to short? Are your shares ever called in? I haven't been tempted to short VXX for that reason.

PaulMaxime

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Re: Anyone play the Volatility Index?
« Reply #5 on: August 25, 2015, 02:22:07 PM »
I short the VXX ETN. It's fundamentally flawed and so in general with a flat VIX it will trend downward strongly over time.  In general I only add to my short over time like yesterday when it spiked like it has.

This is a long term investment using this 'short term' instrument. You could also buy XIV or SVXY and just hold them.

You are providing a service to those who feel the need to manage short term volatility.



Are you able to consistently find shares to short? Are your shares ever called in? I haven't been tempted to short VXX for that reason.

I've had a short open for several years and I've always been able to add to my short any time I've wanted to. Never had a buyback or a warning of a buyback. I use TD Ameritrade and they are pretty friendly to shorting (good supplies of shares and no borrowing fee)
« Last Edit: August 25, 2015, 02:23:57 PM by PaulMaxime »

Financial.Velociraptor

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Re: Anyone play the Volatility Index?
« Reply #6 on: August 25, 2015, 04:43:32 PM »
I routinely buy long dated out of the money puts on UVXY.  I target 150% annualized return to sell and roll down/out.  The underlying is moving against me but the good thing about this play is it only moves against you when vol is increasing and thus options premiums.  That puts a break on losses (i'm actually up through the correction due to expanding premiums).