Trading VIX ETN's instead of Index ETF's

Discussion in 'ETFs' started by GordonTheGekko, Aug 18, 2011.

  1. GordonTheGekko

    GordonTheGekko Guest

    The VIX and SPY move almost inversely all the time, so why not buy/short the TVIX/XIV ETN's instead of buying and shorting SPY or SPX?

    Btw, I'm long XIV (inverse VIX) right now.

  2. In the prospectus it clearly states that all of these vix derivative ETNs are expected to be almost worthless by 2033 (from memory) is the year they mature and are cash settled. You should figure out how it is that ALL of the varieties will become almost worthless in ~20 years. Today gave you a perfect example of why XIV will be almost worthless: string together a few more days like today in a row and it will be impossible to recover the old price highs. They will reverse split it whenever they need to to keep the price at a tradeable level.

    I do agree that trading these can be very profitable (I trade them at times), but it is life and death to know their strengths and weaknesses. Reading the prospectus is a great start (I know this is asking a lot of the average ET'er, but you aren't average I'm sure).