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Gold and Copper look like they are about to explode. Just an observation...

The ACD Method From last Wednesday. All internals...

Thnx for posting.

I was fortunate to partner up with a few guys to do this for me.

It won't because a majority of the public has no idea how to trade a "curve" in volatility.

I'll push back a little bit on this but I understand the spirit of your argument. I should be more clear, that in finance when we use DCF, we are not trying to come up with a "real" value per se of a given product but rather the value of the cash flows that come from that product. We "Should"...

I have no issues with a non traditional valuation approach but we need to define it as such. For example, if you were a wealth manager selling this product to a client, how you would you frame it? As you said, you would talk about the benefit it can provide in certain situations but what...

That term you are referring to in regards to synthetic cash has a name, it's called "economic rent" and that applies directly to patents. Economic rent is different then cash flows. You can value that more perhaps as an option vs a cash flow. The issue I have with the variance swap is to...

Ahh, playing the ambiguous card now. Look, your statement was that there is some kind of "jump" in value when the discount rate changes like a one off event. I explained to you that the risk in the market is a continuous factor. It get's discounted daily. Therefore, a "volatility" factor is...

No raising the discount rate lowers the NPV.

Hey Coach, are there threads on ET that help you make more money in the market? Holy smokes Batman, show me! :) Good to see you again OC.

So there is a breakdown here in terminology. Assets that have value beyond 12 months are referred to as capital assets. Assets that terminate in value in under 12 months are referred to as money market instruments. So Bonds are typically referred to as capital assets and t-bill are money...

The issue I have here is that asset classes were kind of created in the financial community to sell the idea of diversification, not leverage. One could theoretically make the argument for long vol being an asset class as it is not correlated with other assets except maybe long bonds. Short...

That is not correct. There is no "jump" in value. The "discount" rate, which is what the world uses to discount future cash flows of any asset has a risk premium embedded in that rate. That rate changes on a daily basis. The discount rate I assign to XYZ today will be different then the...

Try again. This is exactly what I said: "No. An asset is defined as something that can generate cash flows. Not something that goes up in time. It has value in time. There is such an asset that generates cash flows from short vol and that is equities. They benefit over time from a lower risk...

I said short vol is an asset class. It's called equities.

You need to read the prospectus, the volatility ETF's play a lot of games with their holdings in order to optimize their returns. It's not black and white sig. FWIW, I knew one of the largest market makers at the CBOE who traded made two sided markets in VIX options that explained some of...

You can read all the ETF risks here: https://www.hkex.com.hk/eng/prod/secprod/risksetf.htm

Agree completely on the opportunity cost of Gold which is why I hate to call it an asset. Although technically in a negative interest rate environment Gold can earn synthetic interest! Although the cost of storing it probably wipes that out.

Back to the OP, I would further offer this up in my defense. Being long VXX or XIV has as much to do with the forward curve of volatility as it does volatility itself. I made the same point on another thread about being long energy etfs. You are really trading the shape of the curve with...