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Going short on VIX?

Thursday, April 29th, 2010
Unlike the S&P 500 or Dow Jones Index there is no way to directly invest in the VIX index.  I’m sure some really smart people have tried to figure out how to go long or short on this computed volatility index, but currently there’s just no way to do it directly.  Instead, you have to invest in a security that attempts to track VIX.  None of them do a great job of this.   I’ve given a short answer and a long answer below on how to best short the VIX given the current choices.  Take your pick.
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Short Answer
  • To go short on VIX buy XIV
    • XIV attempts the opposite percentage moves of VXX.  Since VXX only manages about 50% of the VIX’s percentage moves you should expect XIV to have a similar behavior.  For more on XIV see this post.

Long Answer

Read More

Posted in Advanced Topics, all, Featured, Options, Popular Post, VIX | No Comments »

Trading in IRA accounts, and avoiding “free riding”

Monday, January 4th, 2010

As much as possible I try to trade in my IRA accounts—in order to defer taxes of course. It is a bit counter intuitive to be doing more speculative activities in a retirement account, but this approach supports my goals:

  • Achieving good returns
  • With reasonable risks
  • While compounding growth

If your money is in Roth accounts, all the better, but most people interested in trading in their IRAs are restricted to traditional IRAs.

There are restrictions on what trades you can do in an IRA account.  For example you can’t short a stock in an IRA account, but option restrictions have eased some over the years,  and market innovations like short ETFs (e.g., SH, SDS) have effectively bypassed some of the more onerous restrictions.    Brokers vary in what they allow in IRA accounts, so pays to ask around.   Fidelity for example allows me to do some types of equity option spreads, while Schwab does not.   Covered calls and protective puts on long positions are broadly available within IRAs.

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Posted in all, Covered Calls, dividend, Featured, Mainstream, Options, Popular Post | 9 Comments »

How to go long on the VIX index

Saturday, January 2nd, 2010

For the average investor there are three, not so attractive ways to go long on VIX:

  1. Buy Barclays’ VXX (short term) or VXZ (medium term) ETNs or one of their competitors (8 as of January 2011) that have jumped into this market.   See volatility ticker for a full list.
  2. Buy VXX or VXZ call options  (recently ProShares VIXY and VIXM began offering options too)
  3. Buy VIX call options / short VIX put options

Posted in Advanced Topics, all, Featured, Options, Popular Post, VIX | 10 Comments »

Next SPY ex-dividend date

Friday, January 1st, 2010

SPY last went ex-dividend Friday,  December 16th, 2011, with a dividend of $0.7701 per share. The table below summarizes first quarter dividend information for SPY, IVV, and VOO—the three biggest S&P 500 index ETFs.

SYMBOL Next Ex-dividend Next Pay date Previous Dividend Est. Dividend
SPY 16-Mar-2012 30-Apr-2012 $0.7701  $0.55
IVV 26-Mar-2012 30-Mar-2012 $0.7701  $0.55
VOO 23-Mar-2012 30-Mar-2012 $0.3430  $.245.

 

You only have to buy a stock or ETF the day prior to its ex-dividend date to be eligible for the dividend.  You can sell on the ex-dividend date if you want and still collect the dividend when the distribution / pay date arrives.    Be aware that  in a flat market the stock or ETF at opening on its ex-dividend date will typically drop in value by the dividend amount.  See Top 10 questions if you have more questions on dividends.

For more information about ex-dividend and distribution dates for SPDR, iShares, Schwab, and Vanguard ETFs see this post.

See the chart below for SPY’s dividend history since 2004.

 

SPY Dividend History

 

 

 

 

 

 

 

Interested in SPY dividend capture?

Looking for ex-dividend information for other ETFs?   Check this page.


Posted in all, dividend, ex-dividend, Featured, Mainstream, master | 3 Comments »

Vance’s rules for six figure investing

Thursday, November 19th, 2009
  • Big moves usually don’t happen in a day, be patient
  • Don’t fight the market
  • Don’t jump in or out all at once
  • Markets tend to move in 3 day cycles, don’t jump the gun
  • Don’t buy at the daily high, at least wait for a retrace
  • What is the upside opportunity vs the down side risk?
  • Risk always goes up with increasing reward—the market is very efficient in that regard
  • You have to take a position on market/stock direction–that’s the hard part
  • Don’t try to pick the top, or the bottom—as Joe Kennedy said “Only a fool holds out for the top dollar”
  • The past does not predict the future—this is basis of technical analysis–it is a mirage.  Charts show psychology, not forces of nature.
  • The moves in the market are best understood as the ebb and flow of fear and greed
  • Markets will move—that much is certain
  • Resistance levels and trend lines are real—because others believe in them
  • Black Swans kill positions that are short volatility (e.g., covered calls)
  • If you have realized 80% or more of the available profit in a position, close it out.  You’ll hate yourself if you let that slip away.

Posted in all, Featured, Popular Post | No Comments »


SYMBOL Next Ex-dividend More Info
DIA 20-Jan-12 SPDR
DVY 26-Mar-26 iShare
IVV 26-Mar-12 iShare
IWM 23-Mar-12 Russell
JNK 1-Feb-12 SPDR
IEF,HYG,LQD 1-Feb-12 iShares
OEF 26-Mar-12 iShares
SCHX 19-Mar-12 Schwab
SPY 16-Mar-12 SPY
VIG 23-Mar-12 (est) Vanguard
VOO 23-Mar-12 (est) Vanguard
XLU 16-Mar-12 SPDR
More Tickers
Volatility Tickers
Bloomberg Rolling 1M vol.  SPVXSTR

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