Trading volatility VIX

Yes. VIX. VVIX. VXX in selected short term instances only.

I trade options on the futures contracts, and the spot VIX. If you trade the securities, you are not really trading the underlying.

So here's the most real example I can give, if you're trading VIX as a security, and VIX settles, it settles at symbol VRO, which might or might not be the index. I bought last month's $11 puts. Last day of trading it was at 10.85. Doesn't matter that the option was only fetching a couple of pennies, if $10.85 was the settlement price, since there are no shares I would have received cash in lieu, or .15 per share X 100 for every contract. That's the way it works, no shares, cash only, and in some instances the actual future's contracts.

So sorry Iowa Golfer, VRO was actually $11.74.

I wouldn't trade it. I would buy VIX calls as portfolio insurance. The only reason I traded it in the above example is that it was short term, and I bought it at a nickel. So for every 20 contracts I risked $200 as speculation to make 33%.

When you buy long term, you pay for it as the insurance is priced in. You really need to look at it as buying the delta of a certain month. The posted delta and gamma are almost always wrong. I won't bore you with the details, but they are.

It's a note. You would be lending to CS your funds, with no guaranty. ETN's will eat themselves, and I'm guessing this has reverse split numerous times like VXX.

Usually notes of this type are not designed to be held long term, although I see why you want to do it.

If you were going to buy one of these long term, I guess now is as good of time as any to do so.

I might do the same thing. Although as a hedge, I think there is more comprehensive portfolio protection to be had buying VIX calls one month and either rolling, or laddering.

You first indicated trade, not hedge.

Anyway, buyer beware on all of these, they are extremely complicated. You need to see which future's contracts they either own or track, and see exactly when they roll. Backwardation and contango will be in play on all of these.

All sorts of deep in the money calls. It depends how far out. What you are looking at is buying calls on the equity VIX index in your stock trading account.

They get expensive for reasons already stated. Dec $10 VIX are over $6. Dec. $10 VIX that you are talking about in your stock trading account.

If you are talking about buying options on the actual futures index, this is different.

You're not going to learn a lot from posts on here.

Keep it simple. If you're trying to buy insurance, go ahead and do some research on the VIX products that you can purchase in your stock trading account. Google using VIX calls versus using SPY and/or SPX puts as insurance. If you're making a volatility trade buy a call option on the VIX futures, not an equity option. You're still limited to the cost of the call plums fees, but it tracks better. And it corrects downward in a hurry.

Seriously, you should do a ton of research before you do anything but buy calls or puts. At least that way you know your maximum loss going in. You should really practice trade for a while.

It has gotten extremely expensive to prudently insure one's portfolio. I'm not sure what it means outside of basic supply demand price pressure.

I've been looking at VXUP & VXDN, but seems to me another way for Credit Suisse to rip off average retail investors with small portfolios. Although these two do have some mechanisms built in to actually track the settlement index number.

It's frustrating to me that simple things like insuring one's portfolio has to be complicated, and so rigged in favor of and larger institutions.

I should probably just concentrate on saving money on my auto and home insurance. Laffy.

I don't know why you buy TVIX, but I buy VIX long calls for insurance at a percentage I find acceptable for my portfolio. It's not an exact science, but I think I have it to where anything over a 25% correction is covered. I sell to close at that point, take the cash and start bargain hunting. At least that's what I've done in the past.

After 2008, most of my entry into the financials were financed by proceeds from VIX calls.

I'm sure I'm a net loser, but I'm buying insurance, so I don't look at it that way.

I don't really trade VIX futures, VIX index options, or any of the exotic ETF's/ETN's. You really need to be watching all day long on that stuff.

It's different all the time. I look at a chart VIX/SPX, or some other broader market index. Sometime TMWX. Currently the energy sector, because I'm overweight there. I try to draw a conclusion from this about what the insurance benefit would be at certain market levels.

Mostly I buy at least 6% higher than the 2 front month's futures contracts. Never more than 45 days. It's less expensive that way. But not all the time. Sometimes I end up with deep in the money calls, and sometimes I end up overpaying, and view this like fire insurance premiums paid, and not used.

The pricing and the tangible insurance result are more an art than science. Black Scholes is mostly worthless. There are months I insure only a percentage of my portfolio to a certain percentage. Currently I'm insuring energy and indexes. 50% of the portfolio's value, for a 25% drop. So in layman's terms, a very high deductible, a large self insured retention.

There's a ton of this stuff on the web, from some very smart people. I've never found an online calculator for it however. If you find one of these, please let me know.