VIX futures

[Gregmal]

So I haven’t been doing a whole lot and while on vacation am not inspired to be doing much more than small trades/swings but if the product of Fed liquidity was snuffing out volatility, is the new trade to be long volatility? Of course the calls and in general VIX futures are a tough long trade. Is the winning formula to short VIX puts? Seems pretty much a given volatility should remain elevated as “whatever” people expect to play out continues to do so or not do so over the coming months.

[thowed]

Sounds about right.  I'm not smart/confident enough to do options sadly, otherwise I'd be doing this.

 

I was rereading a Druckenmiller talk from last May where he was talking along these lines & saying how crazy everything was.  It's aged pretty well.

 

My way of playing this is through a closed-end Macro fund with a great long-term record.  It struggled in 2013-17 because.... there wasn't enough volatility.  This seems like the right environment for it.

 

[TwoCitiesCapital]

I don't trade the options or futures myself, but I do swing trade the ETFs that do. 

My strategy has been a fixed $ position to SVXY which shorts the VIX via futures and options.

 

By keeping it a fixed $, it means I'm regularly taking profits every 5-7% (as VIX falls) so have removed a portion of the position when VIX is low. And add those shares back every 5-7% fall (as VIX rises) and future profit outlook improves. 

 

Not as antifragile as being long VIX, but works most of the time and by taking money off the table it allows you to still benefit from a rising VIX by increasing future returns on your new additions. 

 

Have made multiple swing trades over the last 6 months and have managed +7-8% on the position despite the recent rise in VIX to above 30. And that rise is setting me up for another 7-10% over the next few months I imagine.  

Edited February 5, 2022 by TwoCitiesCapital