In trading vix futures, how do you choose between the calendar spreads and an outright position in a single month in the term structure? Especially in the middle and long term months. Let's say I can sell 10 January Vix futures, and for the same margin can put on 40 calendar spreads – – short January, long February. Both positions will profit as volatility comes down and/or contango drags down the price. What is your experience with one approach compared to the other?
It's a matter of taste, but if/when Vix doubles or triples quickly, I'd rather be managing 10 outrights than 40 spreads.
Check the liquidity of the further out months on VX (open interest and volume) before you put on any spread.
let me list down the commonality and differences commonality must understand and recognise continuation and reversal trend. must decide whether to take continuation or reversal signal. must decide when to cut loss can earn tons of money from the market. outright wider range ie more profit per lot trade with smaller quantity, bigger margin requirement suitable for day trading (instant profit) ie must glue yourself to the chair must be good in trend recognition, chart pattern calender spread smaller range ie less profit per lot trade with bigger quantity, smaller margin requirement suitable for swing trading (profit weeks or months later). some understanding of fundamentals for commodities spreaders (when is drought ....) personally I don't like calender spread. some people said calender spread is more smoother, more predictable but then it is up to individual. If u see my journal, I only trade outright.