You seem dead set on it. You asked for feedback, have received it, and now you decide what to do.
There is a lot of experience here who wouldn't do it; but everyone has a different tolerance for risk and reward.
Selling puts on SVXY
- Thread starter rocky_raccoon
- Start date
You seem dead set on it. You asked for feedback, have received it, and now you decide what to do.
There is a lot of experience here who wouldn't do it; but everyone has a different tolerance for risk and reward.
FAS uses futures to get 3x exposure. It suffers from whipsaws of the underlying index because if has to sell futures when they decline and buy them when they rise. So, if the daily performance of the index is +5%, -5%, +5%, -5% then 3x leveraged product goes +15%, -15%, +15%, -15% with a net result of -5%. Repeat it long enough and 95% of the value is lost.
Are you saying that vol ETFs/ETNs suffer from the same faith?
Aha, you have a position in SVXY and you're getting emotional about it.
Would you please share that position?
I am not dead set on anything yet. I do however consider going short vol if and when it spikes high enough. How exactly I would do it - I have not decided yet. Previously I was buying put verticals on VXX during 15%+ spikes. The problem is that they are rare.
Great article but I know this already. However,even SVXY is not leveraged in a multiple sense, I guess it may suffer from constant ups and downs. I'll wait until a decent sell off in S&P. Then there'll be plenty of opportunities of various kinds.
A 2 year chart is not a long term chart, obviously you were not around trading vol during the 2008-2009 cycle were you? If you are so good at picking bottoms in the SP then sell puts there since short premium seems to be your poison. As Mav said, half of those ETFs and all of the short vol ETFs will cease to exist after the next volatility cycle. Feel free to bookmark this thread and let's revisit when the VIX hits 80.
As far as VIX futures always coming down after a spike -
Quote from rallymode:
A 2 year chart is not a long term chart, obviously you were not around trading vol during the 2008-2009 cycle were you? If you are so good at picking bottoms in the SP then sell puts there since short premium seems to be your poison. As Mav said, half of those ETFs and all of the short vol ETFs will cease to exist after the next volatility cycle. Feel free to bookmark this thread and let's revisit when the VIX hits 80.
As far as VIX futures always coming down after a spike -
VXX was created in Feb'09 and SVXY, XIV and ZIV are even younger.
As for next VIX spike to 80, it will take a chain of events similar to 2008 to happen. I don't think that Fed and the rest of the central banks will allow that to happen. But if it happens, it will be a golden opportunity to short VIX one way or another along with more prosaic activities such as buying regular ETFs.
Oh, and VIX will come down from that spike as it always has
BTW, it seems that the consensus of this board is that the market is about to crash. Am I right?
One has to respect that atticus actually has some skin in the game here with an SVXY position. No offense, but you have been defending the put-selling scheme for hours against the advice of a lot of market experience in this thread but (it appears) have not actually taken a position in it.
Why not hit Vegas instead? At least you'll have a good time.