100k in the VXX
- Thread starter bat1
- Start date
Because of contango...
VXX erodes at the rate 10-15% per month...
Assuming VIX stays around current levels.
That means if VIX stays at 5 yr lows for another 6 months...
VXX will get cut in half to < $10...
Which is why you are seeing big action in sub-$10 puts.
VXX is basically a trading vehicle...
Not a long-term position.
Though a VXX position might make more sense...
If you sell the very expensive calls to offset the erosion.
VXX erodes at the rate 10-15% per month...
Assuming VIX stays around current levels.
That means if VIX stays at 5 yr lows for another 6 months...
VXX will get cut in half to < $10...
Which is why you are seeing big action in sub-$10 puts.
VXX is basically a trading vehicle...
Not a long-term position.
Though a VXX position might make more sense...
If you sell the very expensive calls to offset the erosion.
If you do you will probably be donating money to my account: so knock yourself out.
contango is one thing(a big one) ..what this gvt can come up with into election year is another. and off course vix can easily SPLIT in half from today's levels. i've seen this before.. i'm with you, for same reasons and many more on top of yours...but..we are living thru some crazy times...B&B are in power..anything is possible...
The questions to ask yourself are:
1. Can I stomach the volatility and drawdown while holding for target?
2. What is my ultimate stop if the trade goes wrong?
See this thread for more info on VXX:
http://www.elitetrader.com/vb/showthread.php?threadid=239213
deedee --- dont tell him. these are trade secrets.
i laugh it this one. gl.
i laugh it this one. gl.