DUNCANownsKOBE
02-06-2013, 11:19 AM
http://finance.yahoo.com/echarts?s=VXX+Interactive#symbol=vxx;range=5y;comp are=^vix;indicator=volume;charttype=area;crosshair =on;ohlcvalues=0;logscale=off;source=undefined;
Buy put options on S&P 500 futures indeces like VXX with a maturity date of Jan 14 or Jan 15. This isn't because the actual volatility of the S&P 500 keeps going down, but because these indeces always go down regardless of what the S&P 500 volatility actually does. I can't put everything about how these indeces work into words without it sounding confusing, but what these indeces end up doing is basically always buy the volatility futures at a high and sell volatility futures at a low. The chart I linked above shows what I mean, the blue line is measuring VXX, the red line is measuring ^VIX, what VXX is supposed to measure. There really isn't any way to short the index, so buying puts is the only option.
This article does the best at explaining it a lot better than I just did:
http://investorplace.com/2012/07/vxx-where-wealth-goes-to-die/
*Once funds transfer, I plan on buying some puts, but I don't hold a position as of writing this.
Buy put options on S&P 500 futures indeces like VXX with a maturity date of Jan 14 or Jan 15. This isn't because the actual volatility of the S&P 500 keeps going down, but because these indeces always go down regardless of what the S&P 500 volatility actually does. I can't put everything about how these indeces work into words without it sounding confusing, but what these indeces end up doing is basically always buy the volatility futures at a high and sell volatility futures at a low. The chart I linked above shows what I mean, the blue line is measuring VXX, the red line is measuring ^VIX, what VXX is supposed to measure. There really isn't any way to short the index, so buying puts is the only option.
This article does the best at explaining it a lot better than I just did:
http://investorplace.com/2012/07/vxx-where-wealth-goes-to-die/
*Once funds transfer, I plan on buying some puts, but I don't hold a position as of writing this.