How is Long VXX not Free Money?

stockpredictor

stockpredictor

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Whenever VXX makes an ATL, it eventually retraces the move. All one needs to do is simply buy on a decent move down on new lows. 13.50 is actually a conservative upside target. That is, if buying today at 10, it should eventually net 35%. Plus, this current level isn't even 'barely' a new ATL; its clean move down which means that its better. These opportunities don't come often.

Judging by how long it takes for these moves to happen historically, the aforementioned 'eventually' may require one to wait up to several months. It can also continue to decay and cause psychological pain; this is simply the live of a long vol trader.

One may wish to use multiple timing methods in conjunction in order to help reduce drawdown and negative holding period.
 
im holding VIX and UVXY calls...problem with this play is timing has to be on point...the window of profitability is so small most of the time one losses money. With market entering euphoria mode overdrive one canty help but to expect a correction soon...unfortunately that type of reasoning usually doesn't work out so well and market will continue to climb as crap bonds get purchased via QE.
 
stockpredictor said:
All one needs to do is simply buy on a decent move down on new lows.
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Unfortunately many people lose most of their money buying VXX or UVXY long, whether on dips, large drops, etc. There is literally no strategy that makes money going long VXX and would be profitable every year. While there are plenty of strategies that make money every year, including shorting VXX & UVXY (Seth Golden makes $millions this way). You also need to understand how VXX works and when/why it moves, which is mainly related to VIX futures contango, and has nothing to do with how stocks are being traded.
So I'm sorry to say but you're clearly wrong on this one.

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zghorner said:
im holding VIX and UVXY calls...problem with this play is timing has to be on point...the window of profitability is so small most of the time one losses money. With market entering euphoria mode overdrive one canty help but to expect a correction soon...unfortunately that type of reasoning usually doesn't work out so well and market will continue to climb as crap bonds get purchased via QE.
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Jamie Dimon has posited that this "money-print, BS bull market might persist into 2024". If that turns out to be the case, much will be lost by volatility call buyers in the interim.
 
zghorner said:
With market entering euphoria mode overdrive one canty help but to expect a correction soon
More...


Unfortunately VXX/UVXY can drop even when the market pulls down. The correction would need to be very strong and rapid to have sizable effect on VXX. Also, you can usually find an equivalent LEAP SPX/SPY put that moves very similarly to UVXY or VXX, so buying VXX or UVXY isn't much different from buying SPY puts. You'll make money trading VXX long only if you can make money trading SPX puts long (which is rare except for hedging, meaning being long market anyway).
 
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