anyone ever just long VIX at sub $15 range for 5-6 years?

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badlucktrades

When you're looking at the chart, any time its been bought sub $15...and just held for 5-6 years, it seems like you'd just double your money.... which is pretty good considering its about 20% a year..

anyone ever do this?
 
Can't, you can't buy or replicate (well) VIX index. Instead you have to buy VIX futures which are generally in contango which means you'll have to roll to a more expensive backmonth future. Look at a chart of VXX or VXZ, good representation of the loss you'll incur over long stretches of calm markets. Over 5 years the roll yield would have a huge cost, that said, as experts have noted the 2-sigma (?) events occur a lot more than we expect them to.
 
shooter said:
Can't, you can't buy or replicate (well) VIX index. Instead you have to buy VIX futures which are generally in contango which means you'll have to roll to a more expensive backmonth future. Look at a chart of VXX or VXZ, good representation of the loss you'll incur over long stretches of calm markets. Over 5 years the roll yield would have a huge cost, that said, as experts have noted the 2-sigma (?) events occur a lot more than we expect them to.
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Right. No free lunch.
 
No but I've waited until VIX futures bottomed out (relatively), waited for the index to show signs, bought VX front month futures directly, and made money. Lost money too.

You can't hold these things long term though.
 
badlucktrades said:
When you're looking at the chart, any time its been bought sub $15...and just held for 5-6 years, it seems like you'd just double your money.... which is pretty good considering its about 20% a year..

anyone ever do this?
More...


This is a very typical question for people that first look at the vix index... They assume they can just buy the vix and watch it go up.. I did the same thing years ago... The vix has a mean reverting nature to it as you can see when looking at a long term chart.. It is very very easy to go illquid trading vix futures... If you buy front month futures and roll you bleed for years... If you sell them to collect premium one day you wake up and kapow your out of business.

take a look at the chart on this website.. http://vixcentral.com/ Right now Vix is in backwardation which can last for a while.. But typically upwards of 70 to 80 percent of the time Vix is in contango.. This is where the degradation of longer term trading in VXX and other related vix etf's beats you up really bad.. That being said.. Just by hear your question i would take it upon myself to read alot more before you invest any money in trading vix related products..
 
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