100k in the VXX

Discussion in 'ETFs' started by bat1, Apr 7, 2012.

  1. bat1


    I got 100k in my scottrade account

    VXX sure looks good here under 18

    I'm looking at the VXX hitting 40 in 6 mos when Spain
    crashes and burns and Greece is still there also
    bye bye Euro........

    what do you think?

    yes or no on the VXX in the next 6 mos
  2. Maybe, but not to 40. Going into an election cycle VIX and VXX will be pretty tame. No more than 30 if it does spike.
  3. Because of contango...
    VXX erodes at the rate 10-15% per month...
    Assuming VIX stays around current levels.

    That means if VIX stays at 5 yr lows for another 6 months...
    VXX will get cut in half to < $10...
    Which is why you are seeing big action in sub-$10 puts.

    VXX is basically a trading vehicle...
    Not a long-term position.

    Though a VXX position might make more sense...
    If you sell the very expensive calls to offset the erosion.
  4. Keep your money "dry" until after Labor Day at the earliest. :cool:
  5. If you do you will probably be donating money to my account: so knock yourself out.
  6. Bob111


    contango is one thing(a big one) ..what this gvt can come up with into election year is another. and off course vix can easily SPLIT in half from today's levels. i've seen this before.. i'm with you, for same reasons and many more on top of yours...but..we are living thru some crazy times...B&B are in power..anything is possible...
  7. The questions to ask yourself are:

    1. Can I stomach the volatility and drawdown while holding for target?
    2. What is my ultimate stop if the trade goes wrong?

    See this thread for more info on VXX:

  8. deedee --- dont tell him. these are trade secrets.
    i laugh it this one. gl.
  9. Bob111


    so far so good bat..

    good luck with your bet!
  10. Depending on where your entry is, have you thought about what would happen if it never reached $40, Bat?

    $40 would mean mass panic along with other bad news that the data isn't indicating.
    #10     Apr 10, 2012