Comments on: How to go long on the VIX index

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By: Cliptose

Cliptose — Thu, 22 Mar 2012 07:48:00 +0000

the best way to hedge a long portfolio is holding etfs that pay good dividends and reinvesting when it hits the bargain basement. When you have almost 13 million shares of SPY we are going to be PAID no matter what the market does.

By: Anonymous

Anonymous — Fri, 27 Aug 2010 03:50:00 +0000

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

vance3h — Sat, 10 Jul 2010 14:12:59 +0000

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

sam — Fri, 09 Jul 2010 20:56:07 +0000

Is trading the Vix like trading a stock or does it expire like an option

By: vance3h

vance3h — Mon, 04 Jan 2010 18:17:18 +0000

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

Bill Luby — Mon, 04 Jan 2010 03:20:37 +0000

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

vance3h — Mon, 04 Jan 2010 02:13:41 +0000

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

vance3h — Mon, 04 Jan 2010 01:39:52 +0000

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