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REI_Chris
Registered: Mar 2012
Posts: 30 |
08-19-12 09:03 PM
Quote from Georgi90:
you said absolutely nothing...
If I have to tell you in bold print that setting your net worth on fire is relatively a better idea than shorting the vix then you probably shouldn't have replied.
Edit: reading through your old posts it seems as if you just want people to tell you what to trade.
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7out
Registered: Jan 2011
Posts: 41 |
08-19-12 09:29 PM
Thanks for your reply, but I asked metaphorically if I can short it.
I'm mostly a prop trader with the occassional longer term trade (for me longer term trade is longer than day trading, lol)
I simply came across this thread and started reading up on it, I assumed the VIX or (etf) VXX could only have a value from 0-99, but see that when the VXX was started it started at a $ value of $400 (which has since confused me).
One another note, no I was not considering selling the VXX at such a low level, but rather considering if I could profit from buying it for when volatility will return (and it surely will at some point).
Still new at understanding this, but also saw the VXX is simply at $11.20, and if I could hold $100k worth of shares until volatility returns, would my value not double or even triple within a 1 year time period.
Quote from REI_Chris:
Whether you can or not is somewhat irrelevant if you're not hedged or have a damn good reason why you'd be playing with fire like that. I'm not sure about the kind of margin you would need, but I imagine it wouldn't be cheap. Shorting the vix, at these levels, is asking for disaster. Again, I don't know your true plans so maybe you're not doing it outright, but I can think of a thousand far more profitable and safer things to trade with a similar payoff that would allow you to sleep at night!
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REI_Chris
Registered: Mar 2012
Posts: 30 |
08-19-12 10:30 PM
Quote from 7out:
Thanks for your reply, but I asked metaphorically if I can short it.
I'm mostly a prop trader with the occassional longer term trade (for me longer term trade is longer than day trading, lol)
I simply came across this thread and started reading up on it, I assumed the VIX or (etf) VXX could only have a value from 0-99, but see that when the VXX was started it started at a $ value of $400 (which has since confused me).
One another note, no I was not considering selling the VXX at such a low level, but rather considering if I could profit from buying it for when volatility will return (and it surely will at some point).
Still new at understanding this, but also saw the VXX is simply at $11.20, and if I could hold $100k worth of shares until volatility returns, would my value not double or even triple within a 1 year time period.
Gotcha! I didn't seriously think anyone would be shorting anything vix related here whether it was futures or an etf, but ya never know. It could have also been hypothetical to pair it with some kind of long position as I didn't know what your real intentions were.
As for vxx, each time someone thinks it wont go lower, it does. There's mathematical and fundamental reasons as to why the 3 year curve is essentially inversed exponentially. Taking a stab here is really a gamble. I'd be more inclined to buy a bunch of debit spreads, maybe some reverse condors to capture either move, because we're going to see some vol spikes here soon, especially heading into the fall. It's far easier to bet on vol coming back into the markets than it is to bet on a side.
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TskTsk
Registered: Dec 2011
Posts: 343 |
08-20-12 05:41 PM
Forget about it, too much contango. The contango definitely favors the short seller, just look at VXX vs XIV. Because of it, VXX has limited upside, whilst XIV has unlimited upside. This contango is reflected in futures. No serious trader messes with VIX or any of the ETFs in trading vola. Go to options.
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REI_Chris
Registered: Mar 2012
Posts: 30 |
08-20-12 06:03 PM
Quote from TskTsk:
Forget about it, too much contango. The contango definitely favors the short seller, just look at VXX vs XIV. Because of it, VXX has limited upside, whilst XIV has unlimited upside. This contango is reflected in futures. No serious trader messes with VIX or any of the ETFs in trading vola. Go to options.
Exactly. I'd try to steer clear of anything that 'tracks' the vix and just look to buy volatility via spreads, maybe long naked options if you want to lay out a bit more in premium. I put a few spy dec ATM condors on in paper to see how they react to any vol spikes, but I'm not necessarily ready to put any real money to action just yet. I think there's some grinding here and then a capitulation breakout which would crush your spreads even further if all you're trying to do is capitalize on vol.
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REI_Chris
Registered: Mar 2012
Posts: 30 |
08-21-12 04:03 PM
Well, not exactly a capitulation breakout, but 4 year highs on the spy. Vix holding its own right here for the moment. There's nobody to take the opposing side right now, which should be a red flag...still seems a bit early with the summer coming to an end and a holiday weekend approaching. Ideally we will keep marching higher herIlona low volume til around that period in time (after holiday) when a majority of professionals come back to the markets and begin to reevaluate their holdings.
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