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VXX
Posted on 5/29/20 at 10:02 pm
Posted on 5/29/20 at 10:02 pm
Any opinions in light of the civil unrest?
2
Posted on 5/30/20 at 6:37 am to LChama
I use VXX as a hedge for all the corporate debt, a bloated fed, GSEs that have deferred payments on the majority of their housing portfolio, and an economic outlook that screams long term recession. Use VXX if you are unsure how long the fed can keep printing money to keep our heads above water.
I would never use VXX for a media inflated, race baited situation. This will accelerate the release of factual data - black on black crime and black on white crime. This situation will fizzle out and the media will have their next left wing story.
I would never use VXX for a media inflated, race baited situation. This will accelerate the release of factual data - black on black crime and black on white crime. This situation will fizzle out and the media will have their next left wing story.
Posted on 5/30/20 at 11:31 am to LChama
quote:
Any opinions in light of the civil unrest?
The VXX has no relation to civil unrest or social events, except for how or when they affect volatility in the S&P 500. It tracks movements in the S&P 500's implied volatility (represented by VIX). Notice that VXX and VIX fell by almost 4%, even as demonstrations were taking place across the U.S.
VXX is an ETN and it's a dangerous product to be playing with unless you're a seasoned trader - most retail investors need to stay away from it, as very few understand the concepts of contango and backwardation, or even what they're putting their money into.
ETA: Those aren’t my downvotes, fellows.
This post was edited on 5/30/20 at 11:47 am
Posted on 5/30/20 at 3:16 pm to Jag_Warrior
I guess the premise was that the civil unrest might spark more volatilty in an already volatile possibly overvalued market. I’ll be watching from the sidelines but interesting to observe this when so many crazy things are happening now and in the coming time period (2nd quarter earnings not being the least).
Posted on 6/1/20 at 7:21 am to LChama
OK, I see what you mean. If something happens that causes the S&P 500 to become more volatile, then yes, that would be reflected in the VIX and the VXX.
The only similar volatility comparison that comes to mind right now is when a company is set to announce earnings. While that's a known event, the unknown is the earnings result. So implied volatility spikes temporarily.
The only similar volatility comparison that comes to mind right now is when a company is set to announce earnings. While that's a known event, the unknown is the earnings result. So implied volatility spikes temporarily.
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