Sure, it can be. Just like millions of other strategies. That’s an invalid question. Why would you assume that strategy developers are dumb and aren’t developing all kinds of algos, including this one? Do they just need to wait for you to ask them such ignorant question?
The main question, is it consistently profitable to daytrade it on a daily basis ? a lot of strategies are good for specific times and specific trends. I'm sure that the big investment and hedge companies have algos for different strategies, the question is for the average daytrader who sits at home. It's not cheap for them to spend thousands of dollars on different algos.
Well, I just see thousands of people every day asking question on the net like “why not do XYZ”, while XYZ is being done all the time. So i just don’t like questions that make assumptions instead of being genuine questions about something you don’t know. Can vol trading be consistently profitable on daily basis? Not possible on daily basis with “a strategy” because even best strategies cannot have rules that work every day. What rule/logic could even determine that TVIX or UVXY should be bought each day? Or sold every day? That’s already two distinct strategies (buy or sell). There is no strategy in the universe that can trade any one instrument or small group of instruments daily. You’ll be lucky if you find one that generates a signal once a month. But combining a few strategies could work, and such strategies do exist for volatility. The problem is that no one has proper TVIX history throughout 2008 market crash, and even if they did, you’d really need 20+ years of data to have decent statistics for analysis. So current strategies may have more weak points and risk than their authors may assume. Especially since each strategy may only trade a few times per year, while more frequently trading strategies are based on weaker signals and have their own risks. In terms of average day traders, your orig “why not” question still doesn’t apply because I know average day traders who trade volatility and automate their strategies. Even some of the vol traders on Twitter are utilizing various automated and semi-automated approaches. While others sell such strategies, or let you subscribe to them on Collective2. So there are plenty of vol strategies being used to not have to ask questions of “why not”