Comments on: How to go long on the VIX index http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/ If you are sick and tired of buy and hold Mon, 06 Feb 2012 05:23:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Anonymous http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/comment-page-1/#comment-72 Anonymous Fri, 27 Aug 2010 03:50:00 +0000 http://sixfigureinvesting.com/?p=494#comment-72 You can't trade the VIX directly. You can trade VIX options, which are based on VIX futures, or VXX / VXZ and their options--which are based on a two month rolling mix of VIX futures. See my "popular posts" section on the right side of my blog for more info. You can’t trade the VIX directly. You can trade VIX options, which are based on VIX futures, or VXX / VXZ and their options–which are based on a two month rolling mix of VIX futures. See my “popular posts” section on the right side of my blog for more info.

]]> By: vance3h http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/comment-page-1/#comment-57 vance3h Sat, 10 Jul 2010 14:12:59 +0000 http://sixfigureinvesting.com/?p=494#comment-57 Hi Sam, I assume your question relates to the VXX, because you can't directly trade the VIX itself. The VXX doesn't expire, so in that sense it is like a stock. However the VXX will never behave like a good growth stock with the prospect of growth every year. Instead it is fated to bounce between two levels, one established by elevated volatility, and the other established by the moderate movements of a quiet market. In fact, its long haul prospects are even worse than that--because its sponsors must continually roll over the futures contracts it's based on there is a structural erosion factor built into the VXX. Over the long run (multiple months) the VXX will always go down. For that reason I don't consider the VXX a buy-and-hold candidate. You should only buy it when you think the market it going to fall sometime in the near future. Hi Sam, I assume your question relates to the VXX, because you can’t directly trade the VIX itself. The VXX doesn’t expire, so in that sense it is like a stock. However the VXX will never behave like a good growth stock with the prospect of growth every year. Instead it is fated to bounce between two levels, one established by elevated volatility, and the other established by the moderate movements of a quiet market. In fact, its long haul prospects are even worse than that–because its sponsors must continually roll over the futures contracts it’s based on there is a structural erosion factor built into the VXX. Over the long run (multiple months) the VXX will always go down. For that reason I don’t consider the VXX a buy-and-hold candidate. You should only buy it when you think the market it going to fall sometime in the near future.

]]> By: sam http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/comment-page-1/#comment-56 sam Fri, 09 Jul 2010 20:56:07 +0000 http://sixfigureinvesting.com/?p=494#comment-56 Is trading the Vix like trading a stock or does it expire like an option Is trading the Vix like trading a stock or does it expire like an option

]]> By: vance3h http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/comment-page-1/#comment-21 vance3h Mon, 04 Jan 2010 18:17:18 +0000 http://sixfigureinvesting.com/?p=494#comment-21 Hi Bill, Thanks for the feedback. I'm hoping to learn more about SEO, and my son, who is a web designer informed me that Wordpress was the way to go. It was a significant learning curve, I hope it's worth it. Thanks for the bogroll mention, I really appreciate it. -- Vance Hi Bill,
Thanks for the feedback. I’m hoping to learn more about SEO, and my son, who is a web designer informed me that WordPress was the way to go. It was a significant learning curve, I hope it’s worth it. Thanks for the bogroll mention, I really appreciate it.

– Vance

]]> By: Bill Luby http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/comment-page-1/#comment-20 Bill Luby Mon, 04 Jan 2010 03:20:37 +0000 http://sixfigureinvesting.com/?p=494#comment-20 Hi Vance,<br><br>I didn't realized this was your new blog. Anyway I like the new look and feel and have replaced the old blog with the new one on my blogroll.<br><br>Hoping seven or eight figure investing is just around the corner,<br><br>-Bill Hi Vance,

I didn't realized this was your new blog. Anyway I like the new look and feel and have replaced the old blog with the new one on my blogroll.

Hoping seven or eight figure investing is just around the corner,

-Bill

]]> By: vance3h http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/comment-page-1/#comment-19 vance3h Mon, 04 Jan 2010 02:13:41 +0000 http://sixfigureinvesting.com/?p=494#comment-19 Hi Paul,<br> The vol curve is not something that I follow directly. Bill at <a href="http://vixandmore.blogspot.com/" rel="nofollow">http://vixandmore.blogspot.com/</a> is a better resource. <br><br> As a longer term investment VXX has shown that it doesn't track the VIX index short term volatility metric particularly well. Their methodology requires them to roll over from current month to next month volatility futures on a daily basis--which hurts them if the next month futures are valued higher than the present month ("in contango" in futures terminology)--which seems to the be the typical case. VXZ is not very popular (only $30M in assets compared to $704M for VXX), so I suspect the bid/ask spreads are wide. Hi Paul,
The vol curve is not something that I follow directly. Bill at http://vixandmore.blogspot.com/ is a better resource.

As a longer term investment VXX has shown that it doesn't track the VIX index short term volatility metric particularly well. Their methodology requires them to roll over from current month to next month volatility futures on a daily basis–which hurts them if the next month futures are valued higher than the present month (“in contango” in futures terminology)–which seems to the be the typical case. VXZ is not very popular (only $30M in assets compared to $704M for VXX), so I suspect the bid/ask spreads are wide.

]]> By: vance3h http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/comment-page-1/#comment-18 vance3h Mon, 04 Jan 2010 01:39:52 +0000 http://sixfigureinvesting.com/?p=494#comment-18 Hi Bill,<br> Thanks for the correction on the beginnings of the VXX/VXZ ETNs. I have corrected the post to reflect the January 2009 launch. <br><br>-- Vance Hi Bill,
Thanks for the correction on the beginnings of the VXX/VXZ ETNs. I have corrected the post to reflect the January 2009 launch.

– Vance

]]> By: paul http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/comment-page-1/#comment-17 paul Sun, 03 Jan 2010 18:35:24 +0000 http://sixfigureinvesting.com/?p=494#comment-17 what does the stock price differential between VXX and VXZ tell you about the term structure of vol? Early 2009 both ETNs were priced above 100 and now a big difference. Has vol curve really steepened that much? Would you view those as good vehicles for playing a flattening, or steepening, of vol curve?<br><br>thanks what does the stock price differential between VXX and VXZ tell you about the term structure of vol? Early 2009 both ETNs were priced above 100 and now a big difference. Has vol curve really steepened that much? Would you view those as good vehicles for playing a flattening, or steepening, of vol curve?

thanks

]]> By: Bill Luby http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/comment-page-1/#comment-16 Bill Luby Sun, 03 Jan 2010 16:41:58 +0000 http://sixfigureinvesting.com/?p=494#comment-16 I'm delighted to see someone else who is interested in the VIX and volatility -- and has some excellent content on the subject.<br><br>I am with Charlie in that the best way for a retail investor to assemble a pure play on S&P volatility is with a straddle on the SPX or SPY. Here an investor also has the benefit of a favorable bid/ask spread and liquidity. The next best choice is probably VIX futures, from which, as you point out VXX and VIX options (for all practical purposes) are derived.<br><br>As an aside, you may want to check your data source on VXX to make sure you have data going back to the 1/30/09 launch.<br><br>Cheers and welcome to the blogosphere,<br><br>-Bill I'm delighted to see someone else who is interested in the VIX and volatility — and has some excellent content on the subject.

I am with Charlie in that the best way for a retail investor to assemble a pure play on S&P volatility is with a straddle on the SPX or SPY. Here an investor also has the benefit of a favorable bid/ask spread and liquidity. The next best choice is probably VIX futures, from which, as you point out VXX and VIX options (for all practical purposes) are derived.

As an aside, you may want to check your data source on VXX to make sure you have data going back to the 1/30/09 launch.

Cheers and welcome to the blogosphere,

-Bill

]]> By: Charlie Lefaux http://sixfigureinvesting.com/2010/01/how-to-go-long-on-the-vix-index-2/comment-page-1/#comment-15 Charlie Lefaux Sun, 03 Jan 2010 14:45:59 +0000 http://sixfigureinvesting.com/?p=494#comment-15 I would say the best option if you want to go long S&P volatility is a near-term delta-neutral straddle as opposed to VXX tracking errors and/or going long VIX futures options. I would say the best option if you want to go long S&P volatility is a near-term delta-neutral straddle as opposed to VXX tracking errors and/or going long VIX futures options.

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