Yes, that's the problem with double short volatility, or single short for that matter. The phenomenon of "volatility drag" creates major problems for long ETPs that replicate short volatility. The rare but extreme spikes in volatility can decimate these inverse volatility products, possibly catastrophically. That's why even though it's been a banner year for short volatility, X048 is actually down on the year. Never mind that it is up fourfold since it's 52 week lows. Had one been stuck with it during a big vol spike, this would've been a wasted year. That's why I'm not in favor of going long inverse volatility ETPs. I think a much better idea is to buy a bear put spread in Vxx. Vxx is a born loser, and the phenomenon of volatility drag just helps to make matters worse for Vxx. Shorting is not an option due to the same sort of spikes alluded to above. I like the structure of the bear put spread for this purpose. Going out maybe six months. Has vxx ever had a winning quarter? Never. Winning months, yes. But if one has the patience to sit out the trade for a few months (in the extremely unlikely contingency that the Vxx spikes and stays up), seems like an ok bet.
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would you like to see double inverse short term VIX?
- Thread starter PHOENIX TRADING
- Start date
Yes, that's the problem with double short volatility, or single short for that matter. The phenomenon of "volatility drag" creates major problems for long ETPs that replicate short volatility. The rare but extreme spikes in volatility can decimate these inverse volatility products, possibly catastrophically. That's why even though it's been a banner year for short volatility, X048 is actually down on the year. Never mind that it is up fourfold since it's 52 week lows. Had one been stuck with it during a big vol spike, this would've been a wasted year. That's why I'm not in favor of going long inverse volatility ETPs. I think a much better idea is to buy a bear put spread in Vxx. Vxx is a born loser, and the phenomenon of volatility drag just helps to make matters worse for Vxx. Shorting is not an option due to the same sort of spikes alluded to above. I like the structure of the bear put spread for this purpose. Going out maybe six months. Has vxx ever had a winning quarter? Never. Winning months, yes. But if one has the patience to sit out the trade for a few months (in the extremely unlikely contingency that the Vxx spikes and stays up), seems like an ok bet.
X048 looks very interesting. Is this the only 2X short vix in the world? I don't think there is any in US market, I didn't even know there is X048 in Europe market until you point it out.
Yes, that's the problem with double short volatility, or single short for that matter. The phenomenon of "volatility drag" creates major problems for long ETPs that replicate short volatility. The rare but extreme spikes in volatility can decimate these inverse volatility products, possibly catastrophically. That's why even though it's been a banner year for short volatility, X048 is actually down on the year. Never mind that it is up fourfold since it's 52 week lows. Had one been stuck with it during a big vol spike, this would've been a wasted year. That's why I'm not in favor of going long inverse volatility ETPs. I think a much better idea is to buy a bear put spread in Vxx. Vxx is a born loser, and the phenomenon of volatility drag just helps to make matters worse for Vxx. Shorting is not an option due to the same sort of spikes alluded to above. I like the structure of the bear put spread for this purpose. Going out maybe six months. Has vxx ever had a winning quarter? Never. Winning months, yes. But if one has the patience to sit out the trade for a few months (in the extremely unlikely contingency that the Vxx spikes and stays up), seems like an ok bet.
By the way is X048 same as this one:
https://www.certificates.commerzban...p-None/rps-None/c-2181777/p-156999414/pc-8655
kind of conflicting and not easy to find info online
The trading volume of X044 and X048 are basically zero, just around 0.25 millions US dollars and 1 million US dollars for the assets, is it even safe to trade these two? The ask/bid spread should be crazy big.
Anyone trades these -2x etf?