vxx

[ScalperJoe]

Quote from rew:

The stock market went down, and as usually happens in that case, the implied volatility of options went up.

Bring up a chart of the VIX against SPX and you will see that when SPX crashes VIX pops up, when SPX trends up VIX goes down.

Bring up a one year chart of the VIX against VXX and you will understand the power of the contango to suck away your cash.

It just takes a small gain in the SPX and the piece of crap VXX crashes hard.

Yes, this "contango" is also prevalent in the ETFs USO and UNG, kind of similar to the volatility premium that gets sucked out of the double and triple inverse funds when the market is in a sustained uptrend.

Without a sustained downward move in the SPX, the VXX is going to continue its trend towards zero, or until they do another reverse split, whichever comes first!

The VXX trades HUGE volume, and volume=commission, so the brokers love it and traders can still take it for a quick trade when intraday volatility increases.

 

[Haakon]

Anyone else think this will spike on the next correction?

From what I see the Russell has allready rolled over, and SPY is holding up but has had some black days the past week. Anyone else thinking that the next correction has begun?

 

[Petsamo]

TVIX is a nice substitute, but it's leveraged 2x.

 

[redwraith]

You guys do realize we've been in a straight up bull move since July? No volatility measure is going to go up much in that environment. VIX is down roughly 60% while the VXX is down about 75% in that period. Seems like a wash to me.