Risky Volatility Funds Set to Make a Comeback

A

Arnie

It's behind a paywall

Two new ETFs that offer leveraged or inverse bets on the VIX set to debut, despite criticism that they are too risky
im-414065

Trading in the VIX pit at Cboe Global Markets in Chicago in 2018. Two new ETFs that let investors make leveraged bets on the VIX have been cleared for launch by the SEC.
PHOTO: SCOTT OLSON/GETTY IMAGES
By and
Oct. 10, 2021 8:03 am ET

Funds that track stock-market volatility are making a comeback, despite concerns they are too complicated for some investors.

Two new exchange-traded funds that let investors make leveraged or inverse bets on a popular barometer of market fluctuations are set to start trading later this fall. Similar products devastated investors in a high-profile blowup less than four years ago.
 
What strange news.

what do they mean by risky?
Is it

- if you try to trade it, the success rate is going to be very poor

- liquidity is going to be very poor. you are going to have a problem
trying to close your position

- its price movement is going to be very choppy / erratic / chaotic.
but if this is the case, traders will avoid trading it and hence there is zero risk.

- manipulators will manipulate the price.
But then, manipulators are creating trading opportunities and hence there is low risk if you know how to trade
 
maxinger said:
What strange news.

what do they mean by risky?
Is it

- if you try to trade it, the success rate is going to be very poor

- liquidity is going to be very poor. you are going to have a problem
trying to close your position

- its price movement is going to be very choppy / erratic / chaotic.
but if this is the case, traders will avoid trading it and hence there is zero risk.

- manipulators will manipulate the price.
But then, manipulators are creating trading opportunities and hence there is low risk if you know how to trade
More...

Good point.

Only things that make it risky, low odds would be light volume/wide spreads, or too-small range. Other than that, lemme at it.

Especially if VIX > 20
 
maxinger said:
What strange news.

what do they mean by risky?
More...

As far as I understand it - and this is supported by very similar terms being used about crypto - it means "clueless morons will lose their money even faster if they trade these products".
 
You must log in or register to reply here.
Back
Top