Seeking Alpha

Volatility players looking good of late

  • Recent buyers of the volatility ETPs are looking smart, with the VXX up 19% in the last 5 days, and the VIIX and VIXY up even more, but that doesn't change the "buyer beware" aspect of these very short-term products, says IndexUniverse analyst Paul Britt. Nice work, he says. Enjoy your profits ... "but this is definitely not the kind of thing you want to leave in your portfolio for a long period of time.”
  • Related ETPs: CVOL, VXX, VIIX, VXZ, VIIZ, TVIX, TVIZ, XXV, XIV, ZIV, XVIX, VQT, VIXY, VIXM, XVZ, IVOP, UVXY, SVXY.
Comments (3)
  • He's right, VXX is a great tool to take quick advantage of the VIX spikes - but here's why going long $VXX is only a short-term play:

     

    http://seekingalpha.co...

     

    I am short $VXX right now, as eventually we'll get these problems of government solved (probably this week) and the $VXX will go back to what it does best and plummet, as smart money moves back short.
    8 Oct 2013, 04:13 PM Reply Like
  • agreed, i am short $UVXY via puts on a similar premise
    8 Oct 2013, 04:41 PM Reply Like
  • QTR, why short VXX rather than buy SVXY?

     

    Its the same trade, but the losses don't snowball in the same way when you're wrong in the short run. Think of it this way: if the underlying VIX futures index goes up 100%+ in the next week, then you're down 100%+ on your VXX short. That could be a big deal depending on position size. SVXY won't go to zero, provided that there are not 100%+ moves in the same day.
    8 Oct 2013, 06:08 PM Reply Like
DJIA (DIA) S&P 500 (SPY)