So take like TVIX, VIIX, etc. Anything based on the VIX. Does any kind of charting really make any sense? Its different from a stock or even a typical index, in that it is an implied volatility based on S&P options I believe. Since it is derived from something else, and that something else is not itself something directly traded, does charting it to try and find support, break outs, etc. even make sense? Hope the question makes sense. Thanks!
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VIX related volatility ETFs/ETNs - charting technical analysis make any sense?
- Thread starter Saltynuts
- Start date
So take like TVIX, VIIX, etc. Anything based on the VIX. Does any kind of charting really make any sense? Its different from a stock or even a typical index, in that it is an implied volatility based on S&P options I believe. Since it is derived from something else, and that something else is not itself something directly traded, does charting it to try and find support, break outs, etc. even make sense? Hope the question makes sense. Thanks!
In a nutshell, no. The reason why is because they are NOT any products that have any values themselves that can be explained by any technical phenomenon; they are multiple-degree more like 4 or 5th degree derivatives which means their values are based on the value of another of another of another of another and not only that their values are not even a direct derivation of another multiple products, but the comparison of relationship of multiple derivative products. So any charting patterns that you see on these products are going to be purely coincidental.
If you take the strip of SPX options being used in the VIX index calculation, you can derive a real time value for VIX. The futures are obviously based around this value, with certain calendarized risk being reflected in their prices.
TVIX is an ETN and therefore it has a predetermined formula for its NAV each day (check out the prospectus if you have a moment). VIIX is an ETF and directly holds futures, therefore there is a direct relationship between the future values and the ETF NAV.
The point being that all of these products can be priced via the futures. So if you think charting makes sense for VIX futures, then these products are directly related down stream.
I do not trade and or claim to understand technical analysis, but I imagine that it is largely based on supply demand/ support resistance. It would be an interesting thought experiment to think of what it means for there to be supply or demand for volatility (in terms of appetite for SPX options which are effectively manifestations of markets for implied volatility)
TVIX is an ETN and therefore it has a predetermined formula for its NAV each day (check out the prospectus if you have a moment). VIIX is an ETF and directly holds futures, therefore there is a direct relationship between the future values and the ETF NAV.
The point being that all of these products can be priced via the futures. So if you think charting makes sense for VIX futures, then these products are directly related down stream.
I do not trade and or claim to understand technical analysis, but I imagine that it is largely based on supply demand/ support resistance. It would be an interesting thought experiment to think of what it means for there to be supply or demand for volatility (in terms of appetite for SPX options which are effectively manifestations of markets for implied volatility)