The fact that you question why the word premium is used when you mention the VX futures means there is still a lot of work to be done. First, when are you going to be so good at calling the VX bottom based on VIX? To prove to you how you can lose money being long vols in a contango environment just look at a price chart of VXX which is an ETN long short-term vol. Each roll costs you money and you could be out long before the move you are looking for ever hits.
I wonder if the better play for the OP is to put the $900,000 in long stocks when the VIX is low/stable/whatever and simply put the $100,000 in loooong-term VIX calls as a hedge .
Listen to sellingindexvol ....... Dealing with rolling off the curve is costly.. You can't just get long vol with a cost.... As shown in the vxx example... You can use options if you're account size doesn't warrent putting on futures flys...
a perpetual motion machine and beating the market. I almost had it a couple of times. I just want a simple system where I never have to make any actual decisions. I'm really good at following instructions. It's the deciding what to do I have problems with.
it really should, but don't be shocked on spot 15 touches. i'm looking for more hedging through the entire curve.
Yeah, as 66 alludes to; you can't buy VIX for 12, easily. You'll have to pay perhaps 13.6 on the forward and then sit on it. Nothing wrong with that, but rolling it would cost you as well.