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OK, how do I buy convexity in the direction of the volatility decline? Put option on VIX or VXX, or put vertical, or something more complex? When vol is high it can go higher but won't stay high for any long period of time. Realistically, if VIX hits 80, will it stay at 80 for a month or come...

VXX was created in Feb'09 and SVXY, XIV and ZIV are even younger. As for next VIX spike to 80, it will take a chain of events similar to 2008 to happen. I don't think that Fed and the rest of the central banks will allow that to happen. But if it happens, it will be a golden opportunity to...

Great article but I know this already. However,even SVXY is not leveraged in a multiple sense, I guess it may suffer from constant ups and downs. I'll wait until a decent sell off in S&P. Then there'll be plenty of opportunities of various kinds.

I am not dead set on anything yet. I do however consider going short vol if and when it spikes high enough. How exactly I would do it - I have not decided yet. Previously I was buying put verticals on VXX during 15%+ spikes. The problem is that they are rare.

Aha, you have a position in SVXY and you're getting emotional about it. Would you please share that position?

FAS uses futures to get 3x exposure. It suffers from whipsaws of the underlying index because if has to sell futures when they decline and buy them when they rise. So, if the daily performance of the index is +5%, -5%, +5%, -5% then 3x leveraged product goes +15%, -15%, +15%, -15% with a net...

I would agree wholeheartedly with everything you've said if you were referring to long volatility ETFs/ETNs. When I look at charts of TVIX or VXX all I can see is a massive short opportunity. Pick any point in the past and you will most likely make money on that short position in a year from...

That's why I am more inclined to sell SVXY puts when the market sells off rather than when it's rising: more premium for the puts and lower strike. VIX it up above 16 with the late day sell off. A little higher (above 20) and there may be an opportunity to go short on vol. So, how will...

Today? Today SPX is down 13 and SVXY is a little below 90. Mid 70 happened in the end of Feb and in mid April. Both times it recovered. Now, let's distinguish between VIX futures and SVXY. SVXY gains from the roll yield even if VIX does not move much. Because of that SVXY puts have a...

Yes, I am asking for help/options/criticism but I expect to see arguments that go beyond labels such as "reckless" or "risky". It it's reckless, explain why. With numbers and scenarios. Historical references would also help. BTW, I am not sure what you mean by "model". Create rules? Sure...

Depends on the size of the legs and the probability. You don't think I would risk my life savings on such a trade, do you?

Sell the calls on SVXY? Why? It drifts higher as long as there is a contango in VIX futures. Selling puts makes more sense. Besides, I don't say to sell then now and choose ATM strike. No, sell when SVXY grops below 80 and go 10% OTM at least. Now, let's talk about possible scenarios. If...

No, I am not trolling. Limited risk is the exact reason I would rather sell puts on SVXY than calls on VIX.

Please elaborate.

What makes you think I don't understand the instrument? BTW, Buffet would not sell puts for SVXY but for different reasons - it's not a company but a bunch of VIX futures.

Look at a longer term. Say 1 year. VXX is down 75%, SVXY is up 150%.

What is VXY? It's not a valid symbol. VXX has been almost flat in the last 4 months as well. Since Feb: VXX went from 23 to 18.5 SVXY from 86 to 90 So, yes short VXX was better than long SVXY but both would make money.

Can you make a case for SVXY to go to single digits? Last time we had a decent sell off was in Jul-Sep of 2011. S&P went down from 1350 to 1110 (17% drop). SVXY was not around at that time but its close cousin XIV was. It went down from 18 to 5 (72%). If we assume similar magnitudes in the...

I assume that you're talking about a straddle or a strangle. If that's the case and you want to hold your position for 2-4 week than buy it with at least 2 months until expiration. You straddle will gain if the underling stock moves within your time frame and that move is big enough. It may...

The longer the expiration the less is time decay. But what is your overall strategy/expectations? Do you plan to hold until expiration or possibly exit earlier? Is there any event pending before expiration (earnings, FDA approval, etc.)?