<p>I lost a lot of money on VXX. “Hedges” became “trades” became “investments” sold some calls but that only helped slightly… finally became tax sales late last year.</p>
<p>I think most people are going to lose trading Vix products, I don’t think I am walking out on a ledge here. Lol</p>
<p><a href=“http://www.indexuniverse.com/sections/blog/9709-keep-vxx-on-a-short-leash.html[/url]”>http://www.indexuniverse.com/sections/blog/9709-keep-vxx-on-a-short-leash.html</a></p>
<p><a href=“http://articles.businessinsider.com/2009-10-28/markets/29995139_1_etfs-bond-funds-trading”>http://articles.businessinsider.com/2009-10-28/markets/29995139_1_etfs-bond-funds-trading</a></p>
<p>Clearly, the best way to make money over time in volatility products is to wait for a spike and then either play the inverse products (XIV or SVXY) directly or buy leap puts on VXX itself (or use a bear put spread). But now would be a good time for any of those plays; if a spike does come you could get killed.</p>
<p>I’ve got those ratio puts spreads in spy that I either paid very little or got a credit for that expire on the 16th - probably time to put on these trades again - may be better than buying vxx.</p>
<p>EMM1, have u been trading these products or just observing?</p>
<p>i have done some trading of the products in the past. Like NJRes, I lost some money in vxx, then made it back writing covered calls on SVXY. Right now I’m just observing; as some of previous posts have suggested, I’m trying to figure out the best way to participate in the long term upside of XIV/SVXY while hedging against the (inevitable) spikes. One of my latest ideas would be simply to buy SVXY and hedge it with out of the money leap puts and perhaps also sell out of the money leap calls. But I’m not sure that just buying leap puts on VXX might not be better.</p>
<p>In any event, doing any of these things with the VIX at 12 looks too dangerous to me. So I’m waiting for a spike–a particularly good idea since the VIX is one of the few pure mean reverters out there.</p>
<p>The Vix does revert… To a point. The Vix is 12 because of qe. So if qe ends the Vix will be trading in a higher range. If the Vix spikes because of the ending of Qe… I would be wary of selling a spike unless the Vix was in the 30s or higher. Just saying…</p>
<p>I take your point.</p>
<p>Glancing at sxvy… Sxvy is going to be a massive short someday.</p>
<p>Maybe…, I am going to think about it…</p>
<p><a href=“Seeking Alpha | Stock Market Analysis & Tools for Investors”>Seeking Alpha | Stock Market Analysis & Tools for Investors;
<p>Ok…these vix products are trading the contango and backwardization
Of Vix futures. The Vix products don’t really trade volatility which is why so many traders get in trouble.</p>
<p>This is the link I meant to post…</p>
<p>[The</a> Art Of Trading Volatility - Seeking Alpha](<a href=“The Art Of Trading Volatility | Seeking Alpha”>The Art Of Trading Volatility | Seeking Alpha)</p>
<p>Backwardation and contango…</p>
<p>Nice article for neophytes like myself.</p>
<p>Yeah…</p>
<p>“What does this mean in the real world? When the futures prices are in contango, the ETF is essentially selling this month’s contract at a lower price and buying next month’s contract at a higher price. This makes the ETF lose value when the rollover occurs, and when this is done over a long period of time, a significant loss of value can occur. On the other hand, when the futures prices are in backwardation, the ETF is now selling high and buying low. That makes the ETF gain extra value when the rollover occurs.”</p>
<p>If you want to position yourself for an increase in volatility and the downside just buy puts or buy time spreads…</p>
<p>I can’t believe these products got an ok… Anything to take the public’s money…</p>
<p>That’s why I plan on buying some of those spy ratio put spreads</p>
<p>That is better. Just remember…you start out short and in a big move you can end up long. (Which might be ok).</p>
<p>I bought those spy mar 143 puts that expire 3/29…for 3 bucks a contract and I am down .20 on those instead of 3.00 after spy rallied 10 bucks.I just kept selling near term options against those.</p>
<p>The lower strike spy’s I can always roll out. One of the nice surprises of this type of trade is that initially when spy or whatever stock goes up, the value of the ratio spread goes up.</p>
<p>That is a nice bonus.</p>
<p>On the off-chance you are still interested, here is a backtest on vxx and xiv going back to 2004.</p>
<p>[VXX/XIV</a> Chart Porn | MarketSci Blog](<a href=“Private Site”>Private Site)</p>
<p>Yeah…xiv benefits by the contango as does Svxy and most of the time the vix futures are in contango. When there is backwardation, vix and svxy get crushed.</p>
<p>vxx goes down most of the time because vxx is hurt by the contango.</p>
<p>You can make money on this, but not the way most traders think.</p>
<p>I want to see what happens when volatility rises and there is still a contango…</p>