Shorting the VIX

[tradingpoker]

You missed it. That is what you are missing. Last I saw it was around 45? So where does it go from here? Up 30 points or down 30 points? Hell of a time to get into the thing.

It's not about where it goes next, it's about it always goes back down long term.

Long term is actually wrong, the max it has stayed up is a few weeks, hence why I say a short is a sure bet. Of course it may spike up more, but that is not my worry. As long as I know it comes back down.

The VIX always comes back down, same when it is very low, it goes no lower and will only spike up at some point which means a long looks like a sure bet as well.

 

[TheBigShort]

does anyone know what this product actually tracks? It's not the Cash price and its not the front month future.

 

[TheBigShort]

They are marketing it like it is spot

 

[Overnight]

...

The VIX always comes back down, same when it is very low, it goes no lower and will only spike up at some point which means a long looks like a sure bet as well.

I thought the same thing when I saw the VX future floating around the 14-15 level the past couple of months. But I could not afford to keep rolling the thing long from month-to-month waiting for the spike which may have never come.

Your approach may be better, shorting from the spiky top. But...

Has it reached it's spiky top? Will it not revert back up again in a week? Hmm!

 

[nooby_mcnoob]

I believe most people who successfully trade vix sell options on the etfs

 

[tradingpoker]

I thought the same thing when I saw the VX floating around the 14-15 level the past couple of months. But I could not afford to keep rolling the thing long from month-to-month waiting for the spike which may have never come.

Your approach may be better, shorting from the spiky top. But...

Has it reached it's spiky top? Will it not revert back up again in a week? Hmm!

what do you mean cost to keep it rolling?

via spread betting here in the UK If I am long at say 15 I can just hold that until it spikes.

 

[Overnight]

what do you mean cost to keep it rolling?

via spread betting here in the UK If I am long at say 15 I can just hold that until it spikes.

I re-edited my post because I KNEW someone would call me out on it, but I was too late. See above post again. The VX FUTURES, not the VIX.

And I do not know what "spread betting" is in the UK.

 

[guru]

in the last 30 years every time the VIX has got to the 50 area it has gone back down pretty much soon after. See my chart in my op.

just before 2009 is spiked to just under 100, but within weeks back under 20, which it is in the process of doing now. Any time it is in the 50 area it seems you can short it knowing not IF it's going to come down, only WHEN it will come down. Every time it has spiked in the last 30 years it has always come back down within weeks.

When has it ever spiked and stayed high?

Waiting for VIX to hit 50 should work, if you’re ok with making one trade every couple years, maybe more often during bear market.
Though generally shorting VIX is quite common strategy so you’re not missing that much in terms of the concept. Seth Golden is the master of this strategy, with a few articles written about him.

on a side note, every time it has gone into the 10-20 range it seems like a long position will always make you money at some point.

I have and use a TVIX long strategy, but this is one of the most difficult things to pull off.
All VIX instruments decay if VIX doesn’t go up quickly enough after your entry, so by waiting you lose by default. Most pro VIX traders don’t believe that trading VIX long is even possible. You may want to try it before theorizing how easy it is.

 

[Sekiyo]

Shorting the VIX is a sucker play.
Unlimited Downside / Limited upside = 0

 

[guru]

Shorting the VIX is a sucker play.
Unlimited Downside / Limited upside = 0

As @nooby_mcnoob mentioned above, you can use related options.
I currently have some 2-year LEAP puts on UVXY, as low as at $5-strike because UVXY decays much faster than VIX, and even more when VIX is volatile and goes up and down a few times. When VIX will drop by 10% in a day, UVXY will drop by 15%.
(I wouldn’t short other VIX instruments directly for now)