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Market hitting new highs, VIX hitting new lows. I don't do ETFs, but thinking regardless of whether things go to hell in a handbasket or not, VXX is bound to soar, and is looking like a "value play" to me.
Then again, WTF do I know about "value". So hoping smarties on the board can help out smarty pants like myself. I'm thinking of buying VXX in my IRA.
If you have the time and effort to trade things like this and want to be active, go ahead. I don't think its worth it since you probobly won't buy enough to make a difference and might be hard staying with it on a day to day basis. Watch it for awhile and see how you might have done. I'm not so smart that I want to bother.
I simply changed you chart to VIX for the short period. If you can buy and hold during these whipsaws, go ahead and see how it goes. I'm too old to do what I did when I was your age, I think. It's still a trading vehicle in my opinion.
I think these sorts of things don't track the underlying spot-on, but I really do think trying to play the VIX would really be much more of a trade than a long-term investment. If you look at VXX last Summer when it was around these levels, you can see what happened shortly after. Not saying that that will necessarily happen again anytime soon, but the VIX is certainly low and there are a number of things (geopolitical, etc) that could cause the market to become more volatile. Again though, I think this is purely a trading vehicle for the short-to-mid term; it would definitely NOT be any sort of long-term hold..
VF, please don't buy this instrument until you understand what it is. It seems indeed very tempting as volatility is bound to go up from here, but as usually, we don't know when exactly this happens. Since this thing invests in futures, which are being rolled each month at ever higher prices, long-term holding will loose you up to 10% a month due to contango. Volatility is a trading tool, not a buy and hold instrument. If you could predict a black swan, and buy this a day in advance, your payout could be amaizing - 10 or 20 fold. But the cost of holding is just too high. Oh, and this is not an ETF.
I am watching this ETN carefully, and am considering adding a 5% position to my portfolio as one of my "alternative" components, along with ABRIX, AQRIX, and PAUIX.
I asked what were "bulls" think about VXX. Anyways...take a look here. Now it is from Morningstar, but they seem to be siding with the investor here instead of acting like a shill for Mutual Fund Companies, so...
*Today’s VIX settlement of 14.55 is the lowest settle since June 2007 (13.01). In fact, VIX March dropped 7% from last night’s close into the settlement print, with SPX unchanged and dropped 34% over the 24 trading days since February settlement.
*Speaking of volatility, TVIX, the Daily 2x VIX short term ETN, whose sponsor, CSFB, halted new creation of units several weeks back, is now trading at a 77% premium to NAV. This is clearly a supply-demand issue. Without any creation of new units, the mother of all squeezes is on. How does it feel to pay 77% more for something than it’s worth? There is little in the way of institutional holders, so any borrow is unstable at best. You Vol professionals can arb out this inefficiency if you can find a borrow. I can't. At some point, our friends at CS will open the pipe again. Then this premium, like the snow in Vermont, will be history.
Comments
http://stockcharts.com/h-sc/ui?s=VXX&p=W&yr=3&mn=0&dy=0&id=p01971068138
http://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=3&mn=0&dy=0&id=p29002070586
http://seekingalpha.com/article/380301-an-updated-field-guide-to-vix-etps?source=yahoo
Right here, right now, I would only invest in VQT, as I like its rule-based system as described here:
http://seekingalpha.com/article/223587-barclays-veqtor-etn-s-p-500-with-a-volatility-hedge
I am watching this ETN carefully, and am considering adding a 5% position to my portfolio as one of my "alternative" components, along with ABRIX, AQRIX, and PAUIX.
Kevin
http://finance.yahoo.com/news/exchange-traded-notes-worse-think-110000072.html
Methinks, might buy LEAP CALLS on VXX some day I'm feeling reckless.
*Today’s VIX settlement of 14.55 is the lowest settle since June 2007 (13.01). In fact, VIX March dropped 7% from last night’s close into the settlement print, with SPX unchanged and dropped 34% over the 24 trading days since February settlement.
*Speaking of volatility, TVIX, the Daily 2x VIX short term ETN, whose sponsor, CSFB, halted new creation of units several weeks back, is now trading at a 77% premium to NAV. This is clearly a supply-demand issue. Without any creation of new units, the mother of all squeezes is on. How does it feel to pay 77% more for something than it’s worth? There is little in the way of institutional holders, so any borrow is unstable at best. You Vol professionals can arb out this inefficiency if you can find a borrow. I can't. At some point, our friends at CS will open the pipe again. Then this premium, like the snow in Vermont, will be history.