# VIX Investing-How? IPath VIX? Or...



## SweetDoug •∆• (Apr 1, 2012)

I'm interested in the VIX.

I'm a basic investor.

I don't dabble in options.

I watch the VIX.

Right now, apparently, there is no "fear" in the market. The VIX is labeled as the "fear" index. Yet it actually tracks the "volitility." Correlation and conclusion?

Anyway, since it's at 15, and at a 25 year low, and considering the problems in the world, I'm pretty sure that it's going to go up.

I am looking at this: iPath S&P 500 VIX Short-Term Futures ETN (VXX) as a way to buy in to it.

Can anyone tell me about this?

Is this just like buying an ETF, such that I can sell at any time, in the future, at the "price" it's quoted at?

I just can't believe what a no-brainer this appears to be, and that the VIX or the VXX won't be at least 20-30 or 40 or 60, if the Iranians do something stupid, not too mention a dozen other things that quite possibly could happen in the next 2 years. Not to mention the other unknown unknowns. 

This is the problem: It just looks too good to be true. I hate being the first sheep down to the watering hole, if ya knows what's I mean...

All insights, and musings are appreciated.

SweetDoug


•∆•
V-V


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## ddkay (Nov 20, 2010)

These volatility threads keep popping up lately, and people can't be blamed for asking. This market has been completely void of a convincing pullback. The NASDAQ is up 20% 3 months into the year. How much better can it get for the bulls? Here's this question being asked a week ago http://canadianmoneyforum.com/showthread.php/10964-holding-the-VIX-noob-question/page2

The short answer is when the market is rising uncontrollably like it is now, it's a terrible time to touch volatility or "bear" products. Also after the recent TVIX drama people may lose confidence in using VIX ETFs.

Whenever the next "downturn" happens and I hope I'm around, I would feel more comfortable riding out TZA (Inverse Russell) SDS (Inverse S&P500) ERY (Inverse S&P energy), at least these are backed by real securities instead of a statistic.


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## dogcom (May 23, 2009)

VXX is a very fast way to make fast money if you time it right and that is the problem of course. I tried it and backed out as I started to bleed and if I hadn't got out I would have bled an awful lot. If you think the market will drop just buy XSB for a much smaller gain but you will go in the right direction and if you are wrong the down side isn't all that much.


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## andrewf (Mar 1, 2010)

I'd recommend against buying VXX on the expectation that the VIX will spike sometime in the next 2 years. That is a recipe for losing perhaps 80% of your money. I know, because I am the one that is taking it, as I am essentially 'short' VXX. There is a chance you might be right, but it would take full-scale panic like 2008, not a little tussle with Iran.

You have to be a lot more tactical with VXX. If you wanted to try trading it, I recommend waiting until VIX starts to spike. A VIX of 15 is not abnormally low. It was under 15 for years in the mid 2000s. It can stay around 15 for months or years while you wait to be right, and in the mean time, VXX will be eroded by contango.


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## dogcom (May 23, 2009)

Good comments andrewf but I would say the VIX will spike in the next two years but good luck timing it. In fact if you had did the buy and hold you might triple your money and then lose all the gains and then some by the time you looked at it again.


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## andrewf (Mar 1, 2010)

Well, we had a VIX spike last August, and VXX is still down 50% Y/Y.


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## webber22 (Mar 6, 2011)

Horizons has a new etf starting Wednesday, *HVI *the S&P 500 VIX Short-Term Futures Inverse

http://www.newswire.ca/en/story/949963/horizons-etfs-launches-canada-s-first-inverse-volatility-etf


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## ddkay (Nov 20, 2010)

Perfect for TFSA's (since you can't short VIX in TFSA's)


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## andrewf (Mar 1, 2010)

Why bother? Use XIV. It's way more liquid.


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