Not in this case.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
VXX a good buy at current levels?
- Thread starter mramaswamy1
- Start date
Not in this case.
Quote from Realistic: VXX like many many other similarly constructed ETF's "GLD, SLV, UNG, USO, is extremely inefficient [i.e flawed]
Compare the various ETF's performance to their respective futures contracts: UNG/NG, USO/CL, SLV/SI, VXX/VIXX, etc...
The Contango effect is too great for anything other than short term trading, and even then I prefer the short side.
Regardless how low it may go, it never increases value proportionately, so you are at a disadvantage from the beginning...
This is so misguided at some many levels, I don't even know where to start. Do you at least understand that when you are trading futures, you are subject to the same risk-premium capture (positive or negative) as you are when you are trading ETFs?
Quote from newwurldmn:
I agree with you. They aren't good instruments to trade and the down drift as a result of the futures roll is toxic.
I just took exception to the comment "they NEVER..." because they can serve a purpose.
Still doesn't mean that they are a good investing vechicle or that the world is better because they were created.
Quote from mramaswamy1:
In spite of the contango effect, VXX cannot go to 0, can it?
It won't go to "zero" only because Barclays will declare a reverse split as the note value nears 10.
If you are speculating as to whether or not the note value might shed another 15 pre-split dollars over the next year or two, the answer is yes.
Quote from Options12:
It won't go to "zero" only because Barclays will declare a reverse split as the note value nears 10.
If you are speculating as to whether or not the note value might shed another 15 pre-split dollars over the next year or two, the answer is yes.
VXX has effectively gone to zero.
Any VIX ETF that has a hard-coded algorithm for positions and rolling...
And many of them do...
Can be reverse-calculated...
All the way back to March 2004 (introduction of VIX).
(just google this).
VXX would have been trading at 1700 in March 2004...
So it's gone from 1700 to 16.54 = 99% decline.
And it will do so again over the next 10 years...
But it's not trivial to withstand 500% spikes...
And maintain a short in terms of Stock Loan, etc
So you can't just short VXX long term...
But you can set up hedges...
That capture most of the roll yield.
Quote from mramaswamy1:
How low can VXX go? Markets have to have some volatility. In spite of the contango effect, VXX cannot go to 0, can it? I am selling naked weekly SPY puts every week. I was thinking of buying VXX shares as a hedge against a market crash.
Some past threads regarding VXX:
http://www.elitetrader.com/vb/showthread.php?threadid=239213
http://www.elitetrader.com/vb/showthread.php?threadid=240342&perpage=6&pagenumber=1
Regarding the question of whether it "cannot go to 0", Barclays can announce a 1 for 4 reverse split anytime the VXX falls below 25:
http://www.ipathetn.com/static/pdf/ipath-split-FAQs.pdf
so....who lost there ass on tvix?
just got in at 5.39
will I lose my ass to lol ...not glta
just got in at 5.39
will I lose my ass to lol ...not glta
To get back to the OP "is VXX a good buy".
Pros sell options for a living = sell time premium...
Often at highly inflated rates...
Likely because retail/public perception of future volatility...
Is always too high....
Or retail/public/hedge funds are willing to overpay.
Since VIX is based on SPX option prices...
Pros sell VIX and VIX related ETN/ETFs...
As a proxy for selling SPX options.
So the only intelligent question is...
"Is it a good time to short VXX"?
Cliff Notes = Pros always sell volatilty
http://www.surlytrader.com/volatility-selling-strategies/
Pros sell options for a living = sell time premium...
Often at highly inflated rates...
Likely because retail/public perception of future volatility...
Is always too high....
Or retail/public/hedge funds are willing to overpay.
Since VIX is based on SPX option prices...
Pros sell VIX and VIX related ETN/ETFs...
As a proxy for selling SPX options.
So the only intelligent question is...
"Is it a good time to short VXX"?
Cliff Notes = Pros always sell volatilty
http://www.surlytrader.com/volatility-selling-strategies/
Quote from DeeDeeTwo:
To get back to the OP "is VXX a good buy".
Pros sell options for a living = sell time premium...
Often at highly inflated rates...
Likely because retail/public perception of future volatility...
Is always too high....
Or retail/public/hedge funds are willing to overpay.
Since VIX is based on SPX option prices...
Pros sell VIX and VIX related ETN/ETFs...
As a proxy for selling SPX options.
So the only intelligent question is...
"Is it a good time to short VXX"?
Cliff Notes = Pros always sell volatility or sit on the sidelines
http://www.surlytrader.com/volatility-selling-strategies/