Vix calls vs spy puts

 

The live action is over on the  blog  tab, but you might be interested in some of the most popular posts I’ve written over the last four years.

Unlike the S&P 500 or Dow Jones Industrial Index there’s no way to directly invest in the CBOE’s VIX® index.  Some really smart people have tried to figure out a way, but there’s just no way to do it directly with something like a VIX index fund.  Instead, you have to invest in a security that attempts to track VIX.  None of them do a great job.  The rest of this post discusses going long on volatility— if you think volatility is going to go down see Going Short on the VIX .

The first two choices are not for the faint of heart.  VIX’s moves are often extreme, so if you bet wrong you can lose money in a big hurry (think 15% or more in a 24 hour period), of course, there is the equivalent upside if you get it right.  In my opinion, these are tools for day traders that stay stuck to their screens and have an excellent sense for market direction.   Unless the market is in a sustained high fear mode (e.g., Aug 2011 through Oct 2011) these funds will often erode dramatically over a multi-day period.   But if you are looking for the best ETN/ETF to track the VIX short term moves this is as good as it gets.

Vix calls vs spy puts

It’s expensive to buy securities that track volatility.  Their holding costs are so high that your timing has to be exquisite in order to end up with a profit.  However, if you’re hedging a short volatility position, or poised to jump into the general market at a possible transition point a long volatility position might make sense.

Consider this chart:

Will the S&P 500 bounce off this trend line for the fifth time, or will it go into a correction?

If SPX breaks through the trendline it’s likely volatility will really spike.   Alternately if the market rallies then volatility will quickly fade, so an asymmetric bet (e.g., call options) is attractive.   If volatility spikes you benefit from the rapid run-up, but if it’s a false alarm your losses are limited.

The live action is over on the  blog  tab, but you might be interested in some of the most popular posts I’ve written over the last four years.

Unlike the S&P 500 or Dow Jones Industrial Index there’s no way to directly invest in the CBOE’s VIX® index.  Some really smart people have tried to figure out a way, but there’s just no way to do it directly with something like a VIX index fund.  Instead, you have to invest in a security that attempts to track VIX.  None of them do a great job.  The rest of this post discusses going long on volatility— if you think volatility is going to go down see Going Short on the VIX .

The first two choices are not for the faint of heart.  VIX’s moves are often extreme, so if you bet wrong you can lose money in a big hurry (think 15% or more in a 24 hour period), of course, there is the equivalent upside if you get it right.  In my opinion, these are tools for day traders that stay stuck to their screens and have an excellent sense for market direction.   Unless the market is in a sustained high fear mode (e.g., Aug 2011 through Oct 2011) these funds will often erode dramatically over a multi-day period.   But if you are looking for the best ETN/ETF to track the VIX short term moves this is as good as it gets.

Welcome to the Forum. This is the members-only place SaferTrader.com investors meet to discuss potential trades they’ve spotted, etc. (No sports or politics, please!) I’ll be looking in and commenting, too.

In your taxable account do your personally do European Indexs for tax advantages or American style or a combination. I understand its a personal decision with pros and cons but I figured I might as well emulate success.

When do you decide to do a Iron Condor if for example you does a bull put spread? Is it if the stock is only trading range bound or will he do regardless of the chart if the stock meets all the other rules? When to do the Iron Condor part has me a little confused because there was no rules to when to do it other than same rules as bear and bull spreads.