Trading Financial markets : VIX

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Euler
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Wed Mar 27, 2013 8:46 pm

I see VIX is heading back towards pre-crisis levels.

http://uk.finance.yahoo.com/q?s=%5EVIX

switesh
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Thu Mar 28, 2013 4:40 am

And the SP500 is at its all time high.

I never really understood why "investors" associated Risk with Volatility until I saw VIX and SP500 plotted on the same graph (attached) and realized that when VIX was high there was bearishness in the market and vice-versa.

Is it obvious to see where the VIX & the market is headed next? Or is it a mis-conception to look at the past and extrapolate it in the future?
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Euler
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Mon Feb 05, 2018 8:58 pm

Finally, VIX heads higher!

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marksmeets302
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Tue Feb 06, 2018 9:00 am

The VXX, an ETF that more or less tries to mimic the Vix index is a favorite short play for many people. It's easy money when the market is calm, then the vxx quietly erodes. But on days like yesterday it can wreak havoc on your portfolio. Looking at after hours trading in the VXX I expect many people have had their positions liquidated. I think you'll hear lots of stories of people gone bust in the coming days. Perhaps even the occasional broker that didn't manage their clients margin requirements properly.

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Euler
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Tue Feb 06, 2018 3:31 pm

Obscure security linked to stock volatility plummets 80% after hours, sparking worries of bigger market effect

https://www.cnbc.com/2018/02/05/xiv-exc ... rcent.html

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Euler
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Wed Feb 07, 2018 10:54 am

Not Wages. Not Inflation. Volatility..... ETFs.

http://rick.bookstaber.com/2018/02/not- ... -etfs.html

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marksmeets302
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Wed Feb 07, 2018 12:46 pm

Euler wrote:
Wed Feb 07, 2018 10:54 am
Not Wages. Not Inflation. Volatility..... ETFs.

http://rick.bookstaber.com/2018/02/not- ... -etfs.html
I must say I despise the recent call for a ban on volatility products. Every time the market drops people start looking for scapegoats. It's buying on margin, It's the bonuses, it's the short selling, it's the volatility products. The people that lost their shirt on Monday didn't protect against tail risks and should have read the prospectus.

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Euler
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Wed Feb 07, 2018 12:58 pm

I agree people seem to ignore those odd events. By contrast, I'll happily lurk there.

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Euler
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Fri Feb 09, 2018 2:38 pm

Volatility Inc.: Inside Wall Street’s $8 Billion Mess

https://www.bloomberg.com/news/articles ... -time-bomb

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marksmeets302
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Fri Feb 09, 2018 3:48 pm

Euler wrote:
Fri Feb 09, 2018 2:38 pm
Volatility Inc.: Inside Wall Street’s $8 Billion Mess

https://www.bloomberg.com/news/articles ... -time-bomb
Peter, that's exactly the kind of sentiment I was talking about. Sensationalism disguised as analysis. Volatility products are dangerous, but useful too. Yes, they are complex but their working is explained exactly in the prospectus. Anyone who took the time to read them would spot the obvious risks. And then either conclude it's not for them or hedge the tail risks. I did the latter and have been very happy with the performance and would hate to see my favorite vola product the VXX go away. (My strategy was to short VXX and buy one month out, far out of the money calls on the VIX. It's a bit tricky to get the proper amount of calls right so I tried to err on the conservative side. For the last few years, every single month I watched those calls expire worthless. Still, the overall strategy was -very- profitable. This time the calls obviously paid off. In contrast, those without some form of protection will have incurred serious losses)

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