Ways to be long vol without paying for it?

ScroogeMcDuck

ScroogeMcDuck

-- Be long bonds (duh)
-- Be long superleap call options on extremely undervalued equities. If vol spikes the options can go up even if the underlying moves in the wrong direction, but usually the underlying will move in the right direction and the calls will make a profit on average.
-- Sell puts on UVXY that are so deep OTM that they'll probably expire worthless.
-- Be long EUR.USD

Does this all sound right? Any others?
 
Short VIX 15 or 16 puts when it gets down around 13. Go as far out in duration as possible. Then place a limit order GTC to cover at 50% profit.
 
To sell options is being short vega (volatility).
I guess you meant to buy, not sell, puts on UVXY.
You can also bracket around news events XD Good luck.
 
Martinghoul said:
How does being long bonds or EURUSD make you long vol? And without paying for it?
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Vol spikes when SPX falls. When SPX falls, yellen lowers interest rates. This results in a weakening of the dollar relative to the euro. And in the absence of some catalyst event shifting the exchange rates, it costs almost nothing to be long EURUSD. I read about top hedge fund managers doing it in this book:
When vol spikes, some investors take their money out of stocks and put it into fixed income. So some fixed income securities have a negative correlation to SPX which gives them a positive correlation to vol. Take for example EDV.
 
K-Pia said:
To sell options is being short vega (volatility).
I guess you meant to buy, not sell, puts on UVXY.
You can also bracket around news events XD Good luck.
More...

UVXY tracks the volatility index futures. So being long UVXY is being long volatility. UVXY has an insane decay rate of like 70% per year though, so it is very expensive to hold. But if you sell put options so far OTM that they won't be ITM after the normal decay rate then you can be effectively long vix without paying an exorbitant price for the privilege.
 
ScroogeMcDuck said:
Vol spikes when SPX falls. When SPX falls, yellen lowers interest rates. This results in a weakening of the dollar relative to the euro. And in the absence of some catalyst event shifting the exchange rates, it costs almost nothing to be long EURUSD. I read about top hedge fund managers doing it in this book:
When vol spikes, some investors take their money out of stocks and put it into fixed income. So some fixed income securities have a negative correlation to SPX which gives them a positive correlation to vol. Take for example EDV.
More...
Haha, mate, this is some convoluted sh1t right here... You sure you got all your causalities the right way arnd? What happens, for example, if the Fed actually decides to hike sooner rather than later? Call it a hunch, but I gots me a funny feeling that things probably won't work quite the way you describe...
 
Yellen said recently that if the shit hit the fan she would consider negative interest rates. Also they stopped talking about rate hikes because unemployment stopped falling and started rising again.
 
ScroogeMcDuck said:
Yellen said recently that if the shit hit the fan she would consider negative interest rates. Also they stopped talking about rate hikes because unemployment stopped falling and started rising again.
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Yes, of course, she would consider negative rates and even the kitchen sink, if SHTF.

Who stopped talking abt rate hikes? Every single Fed speaker recently, including the traditional doves, have been mentioning 2 or more hikes this year. Methinks you haven't followed properly...
 
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