New VIX ETF.....VXUP and VXDN
- Thread starter S2007S
- Start date
You're right, I can't see a way to a tradable product unless a bank can figure out a way to offer an ETN that they can afford to support by somehow offsetting it internally with the exposure of another part of their portfolio. It is almost by definition un-doable, however, since it would create a risk free arbitrage opportunity with VIX futures. The only possible outcomes of that are that the ETN trades to the futures level or it pulls the futures to the spot value.
"I don't know what is so hard, the vix trades around 12, why not come out with a simple VIX etf that tracks it point for point, DONE!!!"
First of all, the VIX certainly doesn't trade around 12. The long term average VIX is closer to 20, and the average of just the last few years of this raging bull market is still about 14.
Secondly, you can't just make a product that tracks the VIX because the VIX is not an index in the traditional sense. It's just called that for simplicity or out of pure habit. The VIX is a statistic of a snapshot of S&P 500 option prices, nothing more.
I wish they would change the name of the VIX Index to the VIX statistic. That would remove a lot of the misconceptions surrounding it.
For anyone who wants to trade the VIX, they already can. VIX options, VIX futures, and XIV/VXX are just fine for the initiated. For the uninitiated, no product will make sense so why even bother?
First of all, the VIX certainly doesn't trade around 12. The long term average VIX is closer to 20, and the average of just the last few years of this raging bull market is still about 14.
Secondly, you can't just make a product that tracks the VIX because the VIX is not an index in the traditional sense. It's just called that for simplicity or out of pure habit. The VIX is a statistic of a snapshot of S&P 500 option prices, nothing more.
I wish they would change the name of the VIX Index to the VIX statistic. That would remove a lot of the misconceptions surrounding it.
For anyone who wants to trade the VIX, they already can. VIX options, VIX futures, and XIV/VXX are just fine for the initiated. For the uninitiated, no product will make sense so why even bother?
Because they want to buy a product for 12 and make a windfall when VIX spikes to 30, which it inevitably will. Of course, no one is stupid enough to take the other side of that "trade," which is why there's no such product. It would be like asking for an "electricity" ETF that buys "electricity" at a typical day-to-day price then goes way up when there's a heatwave. Who wouldn't want to own that? Sign me up!... But as the t-shirt says, you can't fix stupid, and retail boneheads will be complaining about VIX ETFs till the end of days.