VIX is close to being undervalued: Cheap way to play it

Victory5 said:
Exactly. And they're trading (at least over the past few weeks) with a massive premium to the spot and the fact that contango between the front months is so high you are likely to see similar price activity in front month futures for the foreseeable future.
More...


The premium to spot is a legacy from brexit vol last month.

It's more in line now for august and September ..nothing unique at all.
 
ZIRP simply may enforce people putting money in the markets because fixed income is useless, and that may be why we drifted higher so much. But there are still a significant amount of funds/people or what have you that will short/bail when some shit hits the fan. I think election year produces an artificial floor since most people have seen markets rally in a year, and this election is so big. That is why there is potential for a few hiccups of downward bukkakes followed byfloods of buying.

That is why I advocate long vol bets in small doses in the front part and longer-term short vol on the curve but the entries are critical (i.e. you dont just go long and short randomly).

Volume is shit right now so market floats up easily whenever it sells off but who knows... that is why we have a market :)
 
Not yet, but soon.

svixvxvc.png
 
wildchild said:
You already missed the play. The correct play was to short volatility after the Brexit hysteria.
More...

Just reading this thread for the first time now and haven't been further than the above post, but , yes that was an excellent play and one that should have been easy for anyone regularly trading volatility. The tricky part was to to decide when, and if, to cover.
 
trader99 said:
Is TVIX going to zero? LOL. I own some of it at levels which I thought was "cheap". It's certainly a lot cheaper now. Fortunately, it's only a small part of my total portfolio. But still scary watching it going down every day..
More...

If you hold it long enough, it will eventually get very close to zero. And there will be many reverse splits along the way. Not sure why you would want to hold it long term. I hope you understand how it works. If not, do some research to better understand the built in decay factor. Also, you might want to look at an extrapolated graph over as far back a time period as you can go.
 
surfer25 said:
Just reading this thread for the first time now and haven't been further than the above post, but , yes that was an excellent play and one that should have been easy for anyone regularly trading volatility. The tricky part was to to decide when, and if, to cover.
More...

I covered too early in hindsight. But I don't dwell on hindsight too much. I put a pretty heavy short on after Brexit and was able to bank over 20% on it in a few days.

If I break even for the rest of the year, that single trade will make it a pretty good year.

I am just waiting for the next nice set up at this point.
 
Today is exactly the kind of market when you want to be long vol. __Still__, I say not yet. But this time I could be wrong and patience is no longer the right stance.

I just don't believe a September rate hike.
 
You must log in or register to reply here.
Back
Top