Alright atticus, thanks a lot for the info. I appreciate it. I am just a young one looking for some action, what can I say lol!! Anyways, what I will do with this current position is I will put in a stop loss just in case it sinks down a lot. What position would you have put on in VIX, if you were using my mindset? Please give me specific strikes and months, so I can get a good idea. thanks!
Long the 16/20 put spread or perhaps the 12/16/20 fly from 2.00 risk. The basis cannot persist, so there is edge there. It can't be arbed, but you want to be short basis, not long.
Thanks atticus, I will definitely review those strategies. Good news is that I am only playing with $100s not $1000s right now haha.
Klurby, prior to your next vix trade I suggest you watch this video explaining some vix basics, http://masteroptions.com/?p=82 It's been made available by an incredibly benevolent soul at no charge just for vix newbies like you. Really!
Your strategy makes sense. S&P 1600 in a year. You could also long XIV. Riskier but no time value deterioration.
Fortunately I understood the vix product itself, but i didn't know the index was directly correlated to the futures. Now I know! thanks.
hey failed trad3r can you please tell me more about XIV? Is it related to a specific futures product or is it its own product? I imagine if you are long calls in this, you have a bearish outlook on the VIX? thnx.
Right. That's what Atticus was alluding to when he pointed out that the 18 put and call were just a nickel apart with the futures at 18.05. Think put/call parity.
Thanks for the help dmo, I watched the video and I understand now. The vix futures are an idea of where the markets think the vix will be in that certain month. I also found this information. VIX/N1: JULY 2011 VIX/Q1: AUGUST 2011 VIX/U1: SEPTEMBER 2011 VIX/V1: OCTOBER 2011 VIX/X1: NOVEMBER 2011 VIX/Z1: DECEMBER 2011 VIX/F2: JANUARY 2012 VIX/G2: FEBRUARY 2012
in the long run shorting the vix outperforms a lot of things but its kind of like martingaling long XIV with risk capital is how i would do it