This guy is the best... I wish he would put out more content.. I must have watched LCV,LPV,SPV ,SCV Video 7 times each.. it helps me cause its demonstrated on TOS
They are mathematically the same thing, so it's just up to the preference of the trader. The only reason people think that short call verticals are "short vol" and long put verticals are "long vol" is because they are not using the same strikes. You can check out this video for a better explanation, but both verticals are mathematically the same thing: ruclips.net/video/5cyoCGe_Z8o/видео.html&ab_channel=VTS-BrentOsachoff
I've actually done a video on this subject already, basically explaining they are more or less the same thing. ruclips.net/video/5cyoCGe_Z8o/видео.html&ab_channel=VTS-BrentOsachoff
Agreed, but what else is new right? I used to rant hard against the Fed 5-10 years ago, but these days I'm so used to them destroying everything that it's just something in the equation of investing at this point. We just have to count on them doing the most irresponsible things as the default position and deal with it as best we can.
It's true that buying a VIX call when the VIX is low doesn't have the same vega problem that buying a put when VIX is high does. The downside to the call is the timing of it. For the put when VIX is high, we already know it's going down, and likely pretty soon. With the call when VIX is low, the skew and vega problem isn't as big an issue, but the timing is a major problem. Both trades have very low probability of success, but for entirely different reasons :)
Brent, on your video 4 ways to short Volatility you put vertical spread as #2 and deep ITM stock replacement puts as #1 best strategy. Are you saying here that vertical spread and butterfly are better than stock replacements? When is the best to use the butterfly strategy and when is it best to use stock replacement put options?
I think it's important to differentiate between trading volatility ETPs and trading VIX options, they are completely different. So the first video about 4 ways to short volatility, that was talking about vol ETPs directly. This video is talking about VIX options directly. Having said that, I would say overall stock replacement has the most advantages. If you want to use butterflies and verticals, they work great as well but you have to allocate differently, likely much smaller, as they are faster moving positions that can either gain value or lose value a lot quicker than long term stock replacement can. So as an example, for my Tactical Volatility strategy that uses stock replacement, I allocate 20% of the portfolio and it all goes into each trade we take. But for butterflies and verticals, I only do that within VTS Options, and typically at allocation sizes closer to 3-5% per trade.
I very rarely trade short dated contracts, I like to keep my options trades about a month or two out in time. In my opinion there's no edge in short term trading, it just increases the risk for very little additional payoff.
Thanks for your abundant knowledge sharing. Iam just confused. In your above video you shared 2 ways to short VIX and one of them is "Long Put Vertical". The you have made another video showing "Why Put Option don't work". Please clarify .
I single Put option is an entirely different trade than a Put Vertical. With the Put Vertical you can make your profit if the VIX drops down to your specified level, regardless of the implied volatility and vega effects. Since you're both buying and selling, the volatility effects are minimal so there is very little built in headwind to that trade which makes them quite effective on something like the VIX when you are fading a spike. With a straight long Put option, you're buying in with a massive volatility headwind and require an insane drop in the price to even begin to be profitable. Total different trades :)
@@VolatilityTradingStrategies Thank you for the great content. I am also confused since there is another video saying best strategy to short volatility is to do stock replacement through long VXX puts. Is this viable after the spike in Mar2020?
No, long SVXY and shorting the VIX through options are not the same thing. SVXY tracks the front two months of the VIX futures, which are in steep backwardation right now and there is a significant headwind for SVXY. The only time you ever want to consider holding the inverse volatility ETPs like SVXY is if the M1:M2 VIX futures and VX30:VIX roll yield are in your favour. So right now the two most efficient ways to short volatility are through options directly on the VIX, or just long equities. I know "long equities" isn't what people have in mind when they think short volatility, but right now with VIX futures where they are, long equities is far more efficient than long SVXY.
Yeah I plotted SVXY on top of SPX and it’s very correlated. So it makes sense how long equities would work to short volatility. When the VIX is high, it’s time to buy When the VIX is low, look out below
I am very new to option trading, but have been looking into VIX options since the market collapse recently. I have been watching trading volumes on November 18th put options and noticed there is a lot of volume on the $10 strike price. Most of the volume was around the peak and the days following. Since then, the VIX has fell from mid 80 to around 40. It seemed people were buying around $0.10 - 0.15 avg per contract at around the peak and now that it's fell 50% or so, those contracts are still trading around the same. Can you explain the pricing for this and why people are still purchasing puts even though there is no real movement in price with the VIX dropping? Or, point me in the direction for an explanation. Thanks...
Great comment, thanks. That's a very good observation and you're right, it doesn't make much sense does it? So many people think that when the VIX spikes very high, it's an easy trade to just buy way out of the money puts and capitalize on when the VIX goes down. The problem is, the fact that the VIX was high to begin with means the premiums on those puts are sky high as well. So even when the VIX goes down, the vega is also dropping, and the premiums on those way OTM puts won't be going up much. When the VIX is very high, it's still necessary for people to use some more advanced trading ideas, because just buying OTM puts rarely works. That's why I didn't mention it in my ways to short the VIX. It's not efficient. So long Put Verticals, Short Call Verticals, OTM Butterflies, OTM calendars, Diagonals, even Iron Condors can all work on the VIX when it's high. But getting into high long vega positions with the VIX is 80 is not advisable :)
Thank you for the great content. I am also confused since there is another video saying best strategy to short volatility is to do stock replacement through long VXX puts. Is this viable after the spike in Mar2020?
The difference is that VIX and VXX are entirely different instruments. VIX is derived off S&P 500 options, and VXX is priced off VIX futures. Buying a put on VIX doesn't work because all the reasons I mentioned in the video, but none of those apply to the volatility ETPS as the VIX futures are freely traded instruments and are not mean reverting in any way. VXX Puts work very well as stock replacement, simulating a short VXX position without all the risk of shorting directly. Now I always make sure that I'm buying well in the money, higher delta puts with a long duration on the expiration, to make sure it's a pure stock replacement play rather than a vega play.
Outside of the occasional market crash, all insurance type products like VXX / UVXY, or long SPX puts, or long VIX calls, etc, they are all destined to keep decaying. That's not a bug or a manipulation, it's just how insurance has to work. If it was free, everyone would own it all the time and the markets wouldn't make sense. So yes, VXX tends to decay over time, especially when viewed over 1+ year time horizons. Nothing abnormal there. The devil is in the details, because a straight up short also losses massive money. The key is to participate in the expected declines of VXX / UVXY and not get crushed every time it spikes.
What's your take on put debit spreads on vxx? Looks like it really can't lose unless it spikes but even then the price usually collapses back quickly and on a leveraged version such as uvxy it will always go lower. What am I missing here
@@juliok1923 The option markets are efficient and the expected decay is already accounted for in the premiums, so you'll be paying more expensive prices for those because everybody already knows it goes down. There's really no edge in just repeating spreads on them, the upfront cost of that is already priced in, so you need an additional "edge" above and beyond just simply knowing they go down long term. Everybody knows that :) So beyond down, WHEN does it go down, WHY does it go down, and HOW to profit from that? Those are the real questions.
I wouldn't get attached to any specific prices, like "20" or something. The VIX goes through very different volatility regimes. In 2017 for example the VIX barely got over 12 and spent most of the year from 9-12. Selling puts at 20 would be catastrophic. But some years like this year in 2022, selling at 20 would probably have worked out very well. So it's never about the absolute value. Focus on the relative levels given the market we currently have. If you're selling Puts in a small amount relative to your account size, in the low end of the volatility regime we are currently in, and you use a stop-loss to protect against the times you're wrong, then it's a strategy that could work.
Hello, I want to start by saying thank you for the videos. I’m new to trading and I saw something on the TVIX charts that confused me. Why do all of the charts show TVIX anywhere from 100,000 to almost 1 billion dollars per share. I’m showing the 100k around April of 2016 and 1 billion in 2011? Should I just buy a share of TVIX for $250 and risk that money to catch the big pay day or is there something I don’t know?
Whenever you're looking at a longer term chart of any stock or ETF, it's always adjusted for any splits that it's done. And since TVIX has long term downward pressure due to persistent contango in the VIX futures market, it has done MANY reverse splits over the years. So there was never a time when TVIX was priced that high in real live trading, but when looking at a split adjusted price it does make the original value appear like it was in the trillions of dollars per share. So that's the first part of your question, it's just a charting thing adjusting for reverse splits. The second part is much more important and is going to require you to do some more research. Short answer, no you shouldn't buy any TVIX expecting it to go back to those previous prices. It's not possible that it does that. The way TVIX works, and I have a video explaining this in more detail ( ruclips.net/video/NItbEBTuknM/видео.html ) but TVIX derives its price off the front 2 month VIX futures. And since those futures are constantly rolling forward in time and EXPIRING, it means that TVIX can't ever achieve the old values it once was. Instead of viewing TVIX as a long term instrument, it's best to view it as an instrument that is based on a single month, every month, a brand new underlying instrument. And every month, it'll decay downward, then expire, and the next month will be based on an entirely new instrument. Bottom line, TVIX will never get even close to previous values. In fact, it's unlikely that it will ever get back to prices that it was just a few months ago, let alone several years ago. It hit 1000$ recently, but the odds that we ever see 1000$ again is very unlikely, because the VIX futures that caused it to go that high are already expired and no longer affect it's price.
VTS - Brent Osachoff thank you for the reply! I’m slowly wrapping my head around all of this lol I got lucky on the last leg upwards and I’m just now learning how to make money on the way down. I really do appreciate the response and the videos!
Hi Brent, Iam new to volatility trades, Just to understand if I buy UVXY at say today's rate of 21$ and hold it for next 3 months or till the price hikes..the 21$ would have most possibly gone down in value in these 3 months uptill 90% of it's value.( as I understood from your videos) which is why you say don't hold it for more than a few days..However my question is can it trade negative? Like a 100$ invested today can it go down to say -1 ? Or will it only go down till 0? Also can I trade this from my TFSA account
It's still an ETF, so no your value can't go negative. It'll just keep reverse splitting over time and your effective cost basis will be less than 1 penny, but it will always be worth something positive. As to how much it decays over how long, that's up to the market. There are times when the decay isn't that bad, and can actually be substantially positive. But then most of the time the decay is strong and you can just keep bleeding money. Try to view long volatility trading as short term tactical, you'll be better off. TSFA accounts should be able to hold it, but the thing you'll have to check is the tax treatment in Canada for volatility ETFs. In the US there are some brokers that don't allow people to hold securities in their IRA that require a K-1 filing so some people are restricted from SVXY and a few others. So the only way to know what the TFSA will allow is to check with your broker.
@@VolatilityTradingStrategies Thankyou so much Brent for your response..Iam based in Calgary, Alberta. Do you provide official classes which one can enroll to..Something for newbies which gives them certification something like that. I did check some of your tutorials for newbies
@@epsasharma6346 Hey me too! Well, I was born in Calgary and lived there until I was 18, and now I just go back for visits as often as possible. No I don't do any classes or courses or anything. Most of what I do is free, and what I charge for is just the actual strategy signals and the portfolio management itself.
What if I just sell put options (OTM) on SVXY and collect premium ...... in case VOL spikes and I have to take delivery SVXY, then anyway given VIX mean reverting nature I can eventually get out at breakeven ..... am I shorting VOL here or is the thinking nonsense.
Well the VIX index is mean reverting in the medium term, but volatility ETPs are not. So it's a dangerous line to go down when you say you can just take assignment of something and eventually break even. SVXY is still miles below it's all time high, and it's certainly possible that it doesn't get back to it. Of course you can do what you like, and if you do sell naked options on Vol ETPs keep it VERY small, but for me as a rule I don't do it. Why would you sell naked options on vol ETPs given the massive number of ways we can profit through safer and well defined trades? It just doesn't make much sense to me to take on risk when it's completely unnecessary. Long Puts on VXX will be more profitable anyway, and far safer, so why bother with naked options?
@@VolatilityTradingStrategies I am paper trade only ...... is there any reason not to use credit spread strategy (call vertical) on VXX to short volatility, this way risk is capped .... or is it just that you dont prefer inverse R:R
Respect man! Btw, I'm sure your ancestors original last name was Usachov ( Усачев ). There's a famous market in Moscow, so who knows, maybe your grandgrand parents opened it :)
Hey could be! I don't know much about the name, but I know there's very few Osachoff's in Canada so whenever I see that name I always think we must be related somehow.
I've had my TOS account since 2009 and I've always been trading VIX options directly. Perhaps you need to contact them and increase your permissions? It's possible they consider VIX options to be under the options and futures banner maybe, and require you to get permission to trade them. But yes, you could always trade VIX directly at TOS.
I don't ever recommend shorting volatility ETPs directly, too risky and too inefficient when you have to add all the layers of risk management and hedging. But also, shorting the VIX through option strategies isn't the same thing as shorting volatility ETPs. The volatility ETPs have a serious headwind right now due to M1:M2 backwardation in the VIX futures market, so not an efficient trade right now. For a little while, I'd stick to shorting the VIX directly with options, or going long equities as the two safest ways to "short volatility." I know people don't usually equate long equities with short volatility, but it is essentially the same thing and more efficient now given the VIX futures term structure is in backwardation.
@@VolatilityTradingStrategies I watched your video about shorting it vs long upro. I'm not sure if it's this one. Thank you for all of your help and for having such informative videos.
It just adds complexity when I don't find it necessary, and the community wouldn't easily be able to follow along either so it's just best to use what everyone has access and experience in. If commissions are killing you it's probably time to consider a new broker, since commissions these days are the lowest they've ever been.
For lots more of my Volatility Trading info: www.volatilitytradingstrategies.com/volatility-dashboard
Listen to this guy, FYI the VIX was 37 on 5/1/2020, right in the money range for what Brent said!
This guy is the best... I wish he would put out more content.. I must have watched LCV,LPV,SPV ,SCV Video 7 times each.. it helps me cause its demonstrated on TOS
Best channel out there for learning vix
Thanks so much for that, really appreciate it!
I don't get why anybody to downvote this stuff but you should see that as a symbol that you are legit since "haters be hatin'."
Haters do be hatin, but it just lets us know we're on the right track!
398 upvotes to 4 downvotes at the time of my comment. I wish I had that ratio in my life ----HA! Great job as ususal Brent.
Why do you use a Long Put vertical and not short call vertical??
They are mathematically the same thing, so it's just up to the preference of the trader. The only reason people think that short call verticals are "short vol" and long put verticals are "long vol" is because they are not using the same strikes. You can check out this video for a better explanation, but both verticals are mathematically the same thing:
ruclips.net/video/5cyoCGe_Z8o/видео.html&ab_channel=VTS-BrentOsachoff
Can you explain the pros and cons of using a long put spread vs a short call spread to short volatility?
I've actually done a video on this subject already, basically explaining they are more or less the same thing. ruclips.net/video/5cyoCGe_Z8o/видео.html&ab_channel=VTS-BrentOsachoff
Another great video. Also fun to be able to look back in hindsight now. Fed screwing everything up eh
Agreed, but what else is new right? I used to rant hard against the Fed 5-10 years ago, but these days I'm so used to them destroying everything that it's just something in the equation of investing at this point. We just have to count on them doing the most irresponsible things as the default position and deal with it as best we can.
Thank you Brent, waiting for you to signal when you to go ahead with the trade
Did you make big bank?
So does this mean buying a VIX call when the VIX is really low make money if the VIX got really high?
It's true that buying a VIX call when the VIX is low doesn't have the same vega problem that buying a put when VIX is high does. The downside to the call is the timing of it. For the put when VIX is high, we already know it's going down, and likely pretty soon. With the call when VIX is low, the skew and vega problem isn't as big an issue, but the timing is a major problem. Both trades have very low probability of success, but for entirely different reasons :)
@@VolatilityTradingStrategies thank you! that makes sense
Brent, on your video 4 ways to short Volatility you put vertical spread as #2 and deep ITM stock replacement puts as #1 best strategy. Are you saying here that vertical spread and butterfly are better than stock replacements? When is the best to use the butterfly strategy and when is it best to use stock replacement put options?
I think it's important to differentiate between trading volatility ETPs and trading VIX options, they are completely different. So the first video about 4 ways to short volatility, that was talking about vol ETPs directly. This video is talking about VIX options directly. Having said that, I would say overall stock replacement has the most advantages. If you want to use butterflies and verticals, they work great as well but you have to allocate differently, likely much smaller, as they are faster moving positions that can either gain value or lose value a lot quicker than long term stock replacement can.
So as an example, for my Tactical Volatility strategy that uses stock replacement, I allocate 20% of the portfolio and it all goes into each trade we take. But for butterflies and verticals, I only do that within VTS Options, and typically at allocation sizes closer to 3-5% per trade.
If you are expecting volatility to stay elevated in the short term, why not execute the broken wing for Friday expiration?
I very rarely trade short dated contracts, I like to keep my options trades about a month or two out in time. In my opinion there's no edge in short term trading, it just increases the risk for very little additional payoff.
@@VolatilityTradingStrategies OK Thanks....
Volatility looks to be losing steam more rapidly now (unless something re-inflates)
6:48
buy 50 put vix
short 40 put vix
short 40 put vix
buy 30 put vix
Thanks for your abundant knowledge sharing. Iam just confused. In your above video you shared 2 ways to short VIX and one of them is "Long Put Vertical". The you have made another video showing "Why Put Option don't work". Please clarify .
I single Put option is an entirely different trade than a Put Vertical. With the Put Vertical you can make your profit if the VIX drops down to your specified level, regardless of the implied volatility and vega effects. Since you're both buying and selling, the volatility effects are minimal so there is very little built in headwind to that trade which makes them quite effective on something like the VIX when you are fading a spike. With a straight long Put option, you're buying in with a massive volatility headwind and require an insane drop in the price to even begin to be profitable. Total different trades :)
@@VolatilityTradingStrategies Thank you for the great content. I am also confused since there is another video saying best strategy to short volatility is to do stock replacement through long VXX puts. Is this viable after the spike in Mar2020?
Can we buy SVXY for the same goal?
No, long SVXY and shorting the VIX through options are not the same thing. SVXY tracks the front two months of the VIX futures, which are in steep backwardation right now and there is a significant headwind for SVXY. The only time you ever want to consider holding the inverse volatility ETPs like SVXY is if the M1:M2 VIX futures and VX30:VIX roll yield are in your favour. So right now the two most efficient ways to short volatility are through options directly on the VIX, or just long equities. I know "long equities" isn't what people have in mind when they think short volatility, but right now with VIX futures where they are, long equities is far more efficient than long SVXY.
Yeah I plotted SVXY on top of SPX and it’s very correlated. So it makes sense how long equities would work to short volatility.
When the VIX is high, it’s time to buy
When the VIX is low, look out below
VTS - Brent Osachoff
Can you please explain what you mean regarding the VIX futures in backwardation and why that you shouldn’t buy SVXY?
@@VolatilityTradingStrategies Thank you very much Brent for the explanation. Please let us know when the RIGHT time comes for buying the SVXY.
Fascinating
I love the video. Good stuff
I bought my VIX puts today :)
I am very new to option trading, but have been looking into VIX options since the market collapse recently. I have been watching trading volumes on November 18th put options and noticed there is a lot of volume on the $10 strike price. Most of the volume was around the peak and the days following. Since then, the VIX has fell from mid 80 to around 40. It seemed people were buying around $0.10 - 0.15 avg per contract at around the peak and now that it's fell 50% or so, those contracts are still trading around the same. Can you explain the pricing for this and why people are still purchasing puts even though there is no real movement in price with the VIX dropping? Or, point me in the direction for an explanation. Thanks...
Great comment, thanks. That's a very good observation and you're right, it doesn't make much sense does it? So many people think that when the VIX spikes very high, it's an easy trade to just buy way out of the money puts and capitalize on when the VIX goes down. The problem is, the fact that the VIX was high to begin with means the premiums on those puts are sky high as well. So even when the VIX goes down, the vega is also dropping, and the premiums on those way OTM puts won't be going up much.
When the VIX is very high, it's still necessary for people to use some more advanced trading ideas, because just buying OTM puts rarely works. That's why I didn't mention it in my ways to short the VIX. It's not efficient.
So long Put Verticals, Short Call Verticals, OTM Butterflies, OTM calendars, Diagonals, even Iron Condors can all work on the VIX when it's high. But getting into high long vega positions with the VIX is 80 is not advisable :)
What about if you buy a Put ITM? does it have the same problem?@@VolatilityTradingStrategies
So what do you think about getting back into tvix tmr morning for short term gains
Thank you for the great content. I am also confused since there is another video saying best strategy to short volatility is to do stock replacement through long VXX puts. Is this viable after the spike in Mar2020?
The difference is that VIX and VXX are entirely different instruments. VIX is derived off S&P 500 options, and VXX is priced off VIX futures. Buying a put on VIX doesn't work because all the reasons I mentioned in the video, but none of those apply to the volatility ETPS as the VIX futures are freely traded instruments and are not mean reverting in any way. VXX Puts work very well as stock replacement, simulating a short VXX position without all the risk of shorting directly. Now I always make sure that I'm buying well in the money, higher delta puts with a long duration on the expiration, to make sure it's a pure stock replacement play rather than a vega play.
@@VolatilityTradingStrategies Thank you so much i confused between VIX and VXX
Wonder how you think about the down trend of VXX over these years no matter bull or bear?
Outside of the occasional market crash, all insurance type products like VXX / UVXY, or long SPX puts, or long VIX calls, etc, they are all destined to keep decaying. That's not a bug or a manipulation, it's just how insurance has to work. If it was free, everyone would own it all the time and the markets wouldn't make sense. So yes, VXX tends to decay over time, especially when viewed over 1+ year time horizons. Nothing abnormal there. The devil is in the details, because a straight up short also losses massive money. The key is to participate in the expected declines of VXX / UVXY and not get crushed every time it spikes.
What's your take on put debit spreads on vxx? Looks like it really can't lose unless it spikes but even then the price usually collapses back quickly and on a leveraged version such as uvxy it will always go lower. What am I missing here
@@juliok1923 The option markets are efficient and the expected decay is already accounted for in the premiums, so you'll be paying more expensive prices for those because everybody already knows it goes down. There's really no edge in just repeating spreads on them, the upfront cost of that is already priced in, so you need an additional "edge" above and beyond just simply knowing they go down long term. Everybody knows that :) So beyond down, WHEN does it go down, WHY does it go down, and HOW to profit from that? Those are the real questions.
is it make sense to sell put option on the vix while the price is under 20?
I wouldn't get attached to any specific prices, like "20" or something. The VIX goes through very different volatility regimes. In 2017 for example the VIX barely got over 12 and spent most of the year from 9-12. Selling puts at 20 would be catastrophic. But some years like this year in 2022, selling at 20 would probably have worked out very well.
So it's never about the absolute value. Focus on the relative levels given the market we currently have. If you're selling Puts in a small amount relative to your account size, in the low end of the volatility regime we are currently in, and you use a stop-loss to protect against the times you're wrong, then it's a strategy that could work.
Hello, I want to start by saying thank you for the videos. I’m new to trading and I saw something on the TVIX charts that confused me. Why do all of the charts show TVIX anywhere from 100,000 to almost 1 billion dollars per share. I’m showing the 100k around April of 2016 and 1 billion in 2011? Should I just buy a share of TVIX for $250 and risk that money to catch the big pay day or is there something I don’t know?
Whenever you're looking at a longer term chart of any stock or ETF, it's always adjusted for any splits that it's done. And since TVIX has long term downward pressure due to persistent contango in the VIX futures market, it has done MANY reverse splits over the years. So there was never a time when TVIX was priced that high in real live trading, but when looking at a split adjusted price it does make the original value appear like it was in the trillions of dollars per share. So that's the first part of your question, it's just a charting thing adjusting for reverse splits.
The second part is much more important and is going to require you to do some more research. Short answer, no you shouldn't buy any TVIX expecting it to go back to those previous prices. It's not possible that it does that. The way TVIX works, and I have a video explaining this in more detail ( ruclips.net/video/NItbEBTuknM/видео.html ) but TVIX derives its price off the front 2 month VIX futures. And since those futures are constantly rolling forward in time and EXPIRING, it means that TVIX can't ever achieve the old values it once was. Instead of viewing TVIX as a long term instrument, it's best to view it as an instrument that is based on a single month, every month, a brand new underlying instrument. And every month, it'll decay downward, then expire, and the next month will be based on an entirely new instrument.
Bottom line, TVIX will never get even close to previous values. In fact, it's unlikely that it will ever get back to prices that it was just a few months ago, let alone several years ago. It hit 1000$ recently, but the odds that we ever see 1000$ again is very unlikely, because the VIX futures that caused it to go that high are already expired and no longer affect it's price.
VTS - Brent Osachoff thank you for the reply! I’m slowly wrapping my head around all of this lol I got lucky on the last leg upwards and I’m just now learning how to make money on the way down. I really do appreciate the response and the videos!
Hi Brent, Iam new to volatility trades, Just to understand if I buy UVXY at say today's rate of 21$ and hold it for next 3 months or till the price hikes..the 21$ would have most possibly gone down in value in these 3 months uptill 90% of it's value.( as I understood from your videos) which is why you say don't hold it for more than a few days..However my question is can it trade negative? Like a 100$ invested today can it go down to say -1 ? Or will it only go down till 0? Also can I trade this from my TFSA account
It's still an ETF, so no your value can't go negative. It'll just keep reverse splitting over time and your effective cost basis will be less than 1 penny, but it will always be worth something positive. As to how much it decays over how long, that's up to the market. There are times when the decay isn't that bad, and can actually be substantially positive. But then most of the time the decay is strong and you can just keep bleeding money. Try to view long volatility trading as short term tactical, you'll be better off.
TSFA accounts should be able to hold it, but the thing you'll have to check is the tax treatment in Canada for volatility ETFs. In the US there are some brokers that don't allow people to hold securities in their IRA that require a K-1 filing so some people are restricted from SVXY and a few others. So the only way to know what the TFSA will allow is to check with your broker.
@@VolatilityTradingStrategies Thankyou so much Brent for your response..Iam based in Calgary, Alberta. Do you provide official classes which one can enroll to..Something for newbies which gives them certification something like that. I did check some of your tutorials for newbies
@@epsasharma6346 Hey me too! Well, I was born in Calgary and lived there until I was 18, and now I just go back for visits as often as possible. No I don't do any classes or courses or anything. Most of what I do is free, and what I charge for is just the actual strategy signals and the portfolio management itself.
@@VolatilityTradingStrategies thank you for the reply Brent .I will dig in more in your web content. Thankyou
What if I just sell put options (OTM) on SVXY and collect premium ...... in case VOL spikes and I have to take delivery SVXY, then anyway given VIX mean reverting nature I can eventually get out at breakeven ..... am I shorting VOL here or is the thinking nonsense.
Well the VIX index is mean reverting in the medium term, but volatility ETPs are not. So it's a dangerous line to go down when you say you can just take assignment of something and eventually break even. SVXY is still miles below it's all time high, and it's certainly possible that it doesn't get back to it.
Of course you can do what you like, and if you do sell naked options on Vol ETPs keep it VERY small, but for me as a rule I don't do it. Why would you sell naked options on vol ETPs given the massive number of ways we can profit through safer and well defined trades? It just doesn't make much sense to me to take on risk when it's completely unnecessary. Long Puts on VXX will be more profitable anyway, and far safer, so why bother with naked options?
@@VolatilityTradingStrategies I am paper trade only ...... is there any reason not to use credit spread strategy (call vertical) on VXX to short volatility, this way risk is capped .... or is it just that you dont prefer inverse R:R
why not just buy a put with 3 months time?
Very Well Done!
Respect man!
Btw, I'm sure your ancestors original last name was Usachov ( Усачев ). There's a famous market in Moscow, so who knows, maybe your grandgrand parents opened it :)
Hey could be! I don't know much about the name, but I know there's very few Osachoff's in Canada so whenever I see that name I always think we must be related somehow.
Do you guys know of any resources to help me get a better understanding of options trading?
www.cboe.com/education/
I know of one :) www.vtsoptions.com/
Wait you can trade options on VIX in TD now?
I've had my TOS account since 2009 and I've always been trading VIX options directly. Perhaps you need to contact them and increase your permissions? It's possible they consider VIX options to be under the options and futures banner maybe, and require you to get permission to trade them. But yes, you could always trade VIX directly at TOS.
Would I be able to just open a short position on vxx?
I don't ever recommend shorting volatility ETPs directly, too risky and too inefficient when you have to add all the layers of risk management and hedging. But also, shorting the VIX through option strategies isn't the same thing as shorting volatility ETPs. The volatility ETPs have a serious headwind right now due to M1:M2 backwardation in the VIX futures market, so not an efficient trade right now. For a little while, I'd stick to shorting the VIX directly with options, or going long equities as the two safest ways to "short volatility." I know people don't usually equate long equities with short volatility, but it is essentially the same thing and more efficient now given the VIX futures term structure is in backwardation.
@@VolatilityTradingStrategies I watched your video about shorting it vs long upro. I'm not sure if it's this one. Thank you for all of your help and for having such informative videos.
vix{%1/0] = 60
put/call = 60%
I would like to see the same for the VXX!
why don't you just sell a futures contract? don't all the comissions and spreads kill you when doing this multi-leg options strats?
It just adds complexity when I don't find it necessary, and the community wouldn't easily be able to follow along either so it's just best to use what everyone has access and experience in. If commissions are killing you it's probably time to consider a new broker, since commissions these days are the lowest they've ever been.
Why won’t the video load lol
I've not heard anybody say that yet, so it's likely your RUclips settings. Do other videos load for you and you're just having trouble with this one?
VTS - Brent Osachoff It’s weird. It’s just this video that doesn’t load. Has been like this all day
First