Don Fishback

Beware Potential New VIX Products

Hey Stephen, what you just said about being honest with one's level of sophistication could not be any more perfectly said. If you're not honest with yourself, you'll get destroyed. Maybe not immediately, but eventually.

As far as an alternative volatility play, isn't that the key question?

Here's the unfortunate answer. There is none, at least none that is easily accessible to the retail trader. Want proof. Think about this: If there was a pure play on volatility, don't you think they'd have launched that product by now? Instead, they're launching a product based on the futures. The reason is pretty simple. A product designed to be a pure play on volatility is almost impossible to create. Otherwise, don't you think someone would be offering it by now ... especially right now!!

I'll just tell you what I do. When volatility is this high, I sell in-the-money covered calls, out-of-the-money naked puts (secured by cash) and credit spreads.

-- Don

Beware Potential New VIX Products

Hey ETF Expert, Don here.

Thanks for commenting. Before I answer your questions, I have a couple of questions back to you.

You talk about a 95% correlation between the ETN and the item it is tracking. My question is, "What do you think the item is that ETN actually tracks?"

My second question comes from your question that asks, "What would you suggest as a replacement for a volatility play?" Here's my question, "Do you actually think that the new VIX ETN will always represent a volatility play?"

Look forward to hearing your responses.

And as far as waiting and seeing how it performs, they've already posted the backtested data and disclosed the target benchmark, so we can make a preliminary assessment now.

One a completely different subject besides correlations, benchmarks and tracking, one easy assessment is that if you trade these ETNs, you're an unsecured creditor of Barclays!! Do you want your volatility bet to be dependent on the creditworthiness of a teetering bank?

-- Don