04-19-2021, 08:16 AM
(04-19-2021, 04:04 AM)crimsonghost747 Wrote:(04-17-2021, 12:26 PM)NilesMike Wrote: Bought the 2nd leg of a 3 tranche VXX trade. Volatility WILL pop. When? Don't know, but I'm here for it.
Did you just directly buy VXX?
I've never messed with volatility before but I do share your feeling that it will pop sooner or later... and probably sooner rather than later. Is VXX a pretty straightforward "buy & hold until it pops" or is there more to this? It's based on options, so does that mean that this isn't too suitable for a long term (several months?) hold?
I bought UVXY last year for a short-term trade and made money on it, but that's all it is. If you look at a chart of any sufficient length of time for UVXY, you'll see contango in action. It's even clearly visible on a 1yr chart, but the 10yr and 20yr really drive the point home.
Bull markets last for years, and can have spikes of volatility from time to time, but you'll quickly go broke if you try to go long volatility in a bull market for any appreciable period of time. Short volatility was one of the most popular, crowded, and profitable trades of the 2010s. That's why it was such huge news when it blew up overnight in early 2018 on an unexpected spike. After that spike, it quickly dropped back down and mostly stayed there for the next two years, until March, 2020. Both long and short, it's like playing with hand grenades.