iPath S&P 500 VIX Short-Term (VXX-T) — Stockchase (2024)

It goes up when the market is volatile. It's an ETN, not ETF. Is a little credit risk, but offers exposure to the first two months of the VIX futures contract. It's your class disaster insurance, but all insurance has a cost. During Covid, this was up 300% in mere weeks. Gives huge returns over a short time. It's hard for retail investors to grapple. VXX is down 40% YTD. Can be very risky. Use a very small portion of this in a portfolio and actively manage it. During huge volatility, you will need to sell and rebalance to return to a small holding.

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The volatility index ETF. For those who understand volatility and how it works, you could use a vehicle like this to hedge long positions. You must be very good at timing, which is very difficult. You do not want to use this over long periods of time. On average, you are losing 4-8% a month. If you understand volatility, a good short term hedging.

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Holds VIX futures. You have to understand the premium in the front month futures and the spot VIX. Very difficult tools to use. Typically when the market breaks an important level, it leads to some technical selling and usually you get a spike in the VIX. Don’t play it for more than a couple of days at a time.

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He can't stress enough to avoid a product like this. Very dangerous product. Volatility spikes and then goes down very quickly.

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The problem with trying to trade this one is that it is structured poorly for the kind of market we are in. Near term volatility is low and long term volatility expectations are higher. They Buy a contract and as it come closer to maturity, it’s going down in value and when it matures they Buy the long term contract so you are not getting the same performance as you would in the VXX index.

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Tracks short term futures. Has come way down over the last few years to where it is showing stability. That just reflects complacency that has come into the market. That implies that investors are looking for markets to be steady to higher going forward. This is most useful when the market is high and starts to come down.

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Although you may think this is going to be a great hedge against volatility, unfortunately like so many commodity ETF’s, uses futures contracts. Futures’ contracts suffer from Contango and you end up selling cheap but buying dear. You can almost guarantee that 10 months out of 12 will lose money.

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There is a possibility of last summer repeating this summer. Up 200%. Volatility is at a low. Great hedge to the entire performance. Very short trade. Put 5% in this only. Very short play. Cost of owning it is very, very high

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(Tracks the Volatility Index VIX). Volatility seasonally increases significantly from the end of May through until the beginning of October. Still has time to go on this one and it looks like it will continue to the middle/end of October.. He prefers going to cash.

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