iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
23,433 Blog Posts

The World is Upside Down, Damn It

Who are these people buying VIX instruments? And when did these people actually believe they were solid long term holds?

For the sake of balance and zen for the planet and perhaps inter-stellar life, the market must rally here and severely and thoroughly punish those who are long VXX. Listen to me: I am a person with vast and extensive credibility in this devilish product. I’ve made and lost oceans of money in them and know they are the design of hell on earth itself. Whatever you think is going to happen, 1 million deaths due to Ebola, 100,000 heads severed by ISIS, VXX will not win.

Let me put it to you this way. VXX is like that kid from the old neighborhood who always tripped and fell on his elbows when playing tag. He had to run home to mom, dripping blood and tears, because his shoelaces caused him to fall.

Folks, I promise you this: if you over-stay your welcome in VXX, you are going to trip and fall right out of the fucking window, onto your elbows, from 100 stories high.

YOU’VE BEEN WARNED.

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94 comments

  1. gasman

    Went long XIV today. Given your conviction Fly, may I ask why you have not dipped into this inverse play on the VXX?

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    • Dr. Fly

      I have hardly any cash. Plus my utilities got their dicks cut off today.

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      • prometheus

        speaking of utilities, thought you said they were a better hedge than the VXX?

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        • Dr. Fly

          IN A NORMAL FUCKING WORLD, VXX GETS ITS HEAD KICKED IN DAILY.

          Look at a chart, son.

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          • prometheus

            Stupid comment on my part frankly, only asked because you said utes could fetch double digits in these times, but your comment about VXX is inarguable, my apologies.

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          • the_wolf

            in a normal world, we may have rallied tomorrow,
            the world is not normal

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  2. smartestone

    XIV and SVXY are better

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  3. smartestone

    This selling is purely due to ebola. If three Americans becomes 30 you can sure hell guarantee markets will go limit lockdown. Economy will seize up like 2008

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    • Dr. Fly

      ABSURD

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      • heaterman

        Maybe. Maybe not.

        We’ll see how many are infected in a couple weeks………..

        It will also be damn interesting to see if anyone on that plane load of people comes down with it. If they do, a whole bunch of theories regarding how Ebola gets from one person to the next are going to get shot right straight to hell.

        Air lines will go to zero.

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  4. prometheus

    Fly- How well has The PPT been tracking these market moves? You still holding CLR, and if so, where will you sell it? Thanks.

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    • Dr. Fly

      I posted about a week ago, PPT was wrong on its recent OS signal–a rare occasion. We are many days deep into oversold territory and this type of environment has always led to a sharp rally. It’s only a matter of time.

      CLR is one of my top holdings.

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  5. dragun

    my buddy has made a boat load shorting VXX over the past few years.

    Only got burned on a reverse split on the product. Cost him a bit nothing compared to what he made.

    VXX = The Widow Maker.

    All those inverse products are shit and the decay on them is incredible.

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  6. it is showtime

    – Summer 14 –

    I said a convergence was coming. When no one cared about ISIS. Ebola. The border influx.

    Do you really think Iraq/Syria is “done”? Ebola “done”? You don’t have to think it is BY DESIGN. Like some of us do. But this is just getting started

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    • Dr. Fly

      It’s not done. But this is the sort of thing walls of worry are built on.

      Trust in this: while the market may drop, VXX WILL NOT WIN.

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    • frog

      Well, Showtime, you sure lucked out if you shorted based on ISIS, ebola, and the border influx. No, these things are not done. And they may not be done for years. And the market will eventually skyrocket in spite of them– just like it was rising from 2009 on, despite various problems in the world.

      As for ebola, as Fly says, there are 3 effing cases. No reason to have a cow. And the Middle East– what do you expect, all the ethnic and religious groups to join hands and sing Kumbaya? They haven’t done that and won’t. That’s no reason for the market not to rise after the correction is over.

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      • it is showtime

        I guarantee you
        Volatility suppression has occurred, which, was not normal

        I guarantee you
        The market ignoring speedbumps since about 11 was engineered

        Which might imply at some point, the engineers, do not want, the market to ignore, things, anymore. Which is kind of what Im implying! Is the case

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        • frog

          Bernanke and Yellen are just such big Doves that they ran the market up until Yellen had to pause before she made the bubble frighteningly big. Once the correction has gone as far as Yellen thinks is good, she’ll pump liquidity into the market again.

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          • it is showtime

            Possible. Qe4 talk already.

            I would say the market might not REACT to qe4 the same or at all or hyperinflation or whatever other bs scenarios

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  7. project_pat

    I agree if and only if you are greedy. I prefer straight VIX calls / puts if you want to play vol. these instruments are rigged (TVIX UVXY VXX). I sold my October $24 call (tail risk hedge) for 139.33% gain early this morning. If you short these vehicles via shares your wounds might not even be able to be cauterized in short term tho. Holding them…Fly I agree u loose. Better odds with a slot machine. When the time is right tho it is my go to tail risk hedge. VIX truly is a beautiful instrument if you can count ????????????. Btw, Michelle video: wow just wow.

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  8. Section 1256

    $IYR has been unwilling to crash, FWIW.

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  9. mamoore9

    Listen to Fly on this. If you continue to hold or buy vxx/uvxy/tvix now, you’re basically betting on a full on crash right here, right now. You better be right that it goes full on meltdown tomorrow and not next Tuesday or the Tuesday after.

    Don’t think of this as analogous to the volatility in sep/oct 2008. That was the end game. Instead look at the spikes/valleys in fall 2007, when if you were watching it was apparent that a major dislocation was occurring. Vix to 30 and back under 20 three times. The churn will chew up these volatility instruments.

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    • mamoore9

      I should note that I bought some XIV at twenty-five today. I’m on edge like everybody, but I like the odds. I’d probably double down if vix keeps spiking over 40.

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      • sethster99

        Another great set of quotes for my collection. XIV may pay you, however, you do realize that UVXY ended the AH session up 12%, right?

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  10. jdf

    He’s just bitchy because he shorted it.

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  11. Dr. Fly

    Crashes are low probability events.

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  12. matt_bear

    i’m holding a vast amount of VXX weekly $39.50 puts, and dec $30 puts.

    this is my final stand, and i’m going down in a blaze of glort.

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    • matt_bear

      *glory. stupid fucking phone.

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    • sethster99

      You may actually get paid, depending on your cost basis. There is honestly no reason to buy options in anything at this time, however.

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  13. the shiek

    The bond market was absolutely crazy today. You would have thought Kim Jong un had shot a nuke at us. This market is way oversold. Don’t want to hear the words “technical damage” for the rest of the year,thanks. (Acct up 2% today,MXWL + 14%)

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  14. metalleg

    I find TZA to be an interesting animal. It’s an inverse triple I believe and with all indices down, this one shits the bed too. I’ve been watching it the past few days. At times when the market is down a lot, this one moves a little. When the market is down a little, it’s down too. Odd to me but I’m an admittedly an amateur at this.

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  15. surplusdroids

    I think the volume in VIX etfs. (VXX, UVXY)…is primarily robot driven.

    It is far easier to program an HFT bot to purchase the ETF based on some reasons/ factors than it is to purchase the options.

    Lots of other factors, reasons, and analysis come into play in order for the intelligence engine to purchase the options.

    It is far easier to make an object and receive as inputs various pieces of data and then decide to purchase the ETF.

    IMHO.
    I have no hard data to back this up with.

    It is simply more efficient to purchase the ETF than the straight options in hopes of a winning trade.

    It is interesting to see the movement.
    Volume has been large.

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  16. sia

    Whoever owns VXX for more than a day is stupid. VXX is a trading-only vehicle. I love to short VXX during intraday rallies, that thing just tanks.
    Most of the money today I made being SHORT VXX!

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    • schizo168

      i own vxx for more than 6 months,so STFU.. now i am shorting vxx bitches

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      • dragun

        Now tell me about the rest of your buy and hold trades on VXX and the total P/L on said strategy.

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        • sethster99

          Another great quote. I have owned UVXY for 2 weeks. Currently up 60%. I am quite happy with my position going forward.

          How are your long positions faring?

          And I will be happy to share my success on here as I already have.

          Would you like a daily tally? I think all you need to do is watch the tape. The market is going down the toilet, where did you park your money?

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      • sia

        So you are long from April? at 40-45? Suffered a 40% drop? Great.

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  17. the_wolf

    contemplating today,
    what will happen when QE ends,……..
    i guess QE 4 will commence

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  18. sethster99

    I stick with UVXY long and you stick with utes, we will see who wins in a few months.

    BTW, Look up what happens with VXX and the like when VIX futures are in backwardation.

    Wonder why VXX is up huge in afterhours? It is basically saying that the backwardation is exploding higher.

    This IS 2008 people. Get with the program, and you will win big. Otherwise, lose your ass.

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    • sethster99

      Oh, and one more thing. Notice how XIV was stellar since 2011. It’s up huge, much more than the market. This was due to contango in VIX futures.

      Look it up, buy some VXX, TVIX, UVXY, whatever you choose, and thank me after a few hundred percent.

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      • woj

        What is your target for uvxy seth?

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        • sethster99

          I have no target. There really is no way of formulating a target on something that has no underlying value.

          It is a matter of a downside target on the S&P. I believe the S&P goes lower than it did in 08.

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    • Section 1256

      “This IS 2008…” Justify your claim if you will.

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      • sethster99

        Justification is that the market has been going up due to QE with no actual growth. QE has created a false reality. Companies have not been hiring, people aren’t spending like they used to,Ebola is scaring the shit out of people, ISIS, impending war in Israel, Russia/Ukraine, carry trades blowing up.

        Basically, everything is going to hell in a handbasket, and the stock market has been conveniently ignoring reality since the 2009 bottom. We are now facing reality straight in the face, and reality is ugly as fuck.

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  19. mfalke

    Note after the initial crash in Aug 2011, VXX trended higher despite bounces and choppy action. Due to the way VXX is calculated, even if we bounce VXX may not be a bad play. (no position)

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  20. mr.partridge

    This Halloween there are only 2 kinds of costumes : VXX or Ebola.. interesting times.

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  21. the_wolf

    http://www.zerohedge.com/news/2014-10-15/2nd-ebola-patients-akron-ohio-family-home-cordoned
    ebola in cleveland just as i predicted

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    • it is showtime

      All these brainy people catching the headlines each day are so slow to realize what Act2 or Act3 of the play unfolding will contain

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    • Jesse Livermore's Ghost
      Jesse Livermore's Ghost

      Cordoned off doesn’t mean they have ebola. Your reading comprehension is severly lacking.

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      • the_wolf

        i never said they have ebola, i predicted the potential for ebola in cleveland, check my post

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    • sethster99

      LeBron James is from Akron, Ohio. Coincidence?

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  22. alf44


    … take it from an “old insolent wretch” …

    —–

    LOWER !!!

    .

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    • alf44

      .

      … we will almost certainly have to RETEST today’s LOWS before any meaningful recovery can happen !

      —–

      ANY attempt to move HIGHER from here will be met with overhead resistance / selling !!! IMO

      .

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  23. Jesse Livermore's Ghost
    Jesse Livermore's Ghost

    We are close to the bottom.

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  24. Jesse Livermore's Ghost
    Jesse Livermore's Ghost

    For this to be 2008 the entire global financial system would have to be on the verge of collapse and the USA would have to be going into a near depression second only to the Great Depression. If you think this is the case you are an idiot.

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    • alf44

      .

      … well, since Jesse Livermore died virtually broke … blew his brains out in a coat room as a result of the ’29 Crash …

      … and you ARE his “ghost” …

      —–

      YOU should know !!!

      😉

      .

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      • sethster99

        Man, I really need to save these responses. They’ll be hilarious to read after we reach 2009 lows.

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        • Jesse Livermore's Ghost
          Jesse Livermore's Ghost

          Don’t worry, I’m saving the link to this post. When we don’t reach 2009 lows I will gladly repost it.

          The question is will you be too much of a coward to admit you were wrong.

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    • it is showtime

      It’s a house of cards.

      Growth is not RAGING
      checkcopper
      checkbalticdry
      checkgdpeurozone

      Might not take a lot to fall down

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    • heaterman

      Just an observation………
      While the worlds financial institutions may appear fairly sound on paper, I think that we have to realize the only thing holding everything up is the confidence people have in it.
      All the world is fiat, back by nothing more than the faith people have in their currency. Billions. trillions……….they mean nothing if Joe Blow thinks its all going to evaporate.
      I would submit this is the issue that bears observation. If/when confidence in financial institutions and currency fails, we are all done for a very long time.

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  25. ironbird

    Did gold just make a low that no one is talking about? Or is this the relief bounce before a ripping greenback destroys all assets worldwide?

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    • Jesse Livermore's Ghost
      Jesse Livermore's Ghost

      The stocked market has gone up before when the dollar was rising. See 1980’s and 1990’s.

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      • ironbird

        Ahh..The heads you win tails you win boomer fantasy decades. Loved those.

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        • sethster99

          Who cares about gold when you can buy volatility?

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          • ironbird

            Those vol instruments will deball all. They are a classic fad product that will probably get banned. Not really interested in gold just noticed it stopped going down.

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          • sethster99

            Good point. Gold has bottomed, IMHO. I will eventually get out of my UVXY and put it in the metal.

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      • fxtradepro

        I pity the fool…..we’re bottoming near-term, be patient. On that note, I do believe we’re embarking on a longer term topping process. My thesis only is negated by a run back over 1970 in the SP. Then you can beat the war drums for 2100.

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  26. sodapopinski

    http://youtu.be/8wLfzmvr7Ls

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  27. alf44

    .

    … but, seriously !

    —–

    Fantasy Football is the NEW FRONTIER !

    —–

    Online Trading accounts are SO day before yesterday !

    Online Poker is SO yesterday !

    Online Fantasy Football is the NEW Frontier !

    Online Fantasy Football is the NEW Online Poker !

    —–

    OH … AND POT !!!

    Pot and Fantasy Football !!!

    .

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    • alf44

      .

      DISCLAIMER :

      I don’t know SHIT about Fantasy Football but one would have to be blind not to notice that it is BIG … REALLY BIG !!!

      .

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      • alf44

        .

        DISCLAIMER:

        I don’t know … cough cough … shit about … cough cough cough … POT !!!

        .

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  28. highsurf

    It sure looks like $SPX put in the pin bar today. But doesn’t the next bar have to close more than half way up that previous bar to confirm a long signal? Bot a short time long $VIX spread for thrills. May the lord blow us all up real good.

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  29. bushwacker2

    The hyperbole in your commentary is stunning.

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  30. sethster99

    To all of the VXX/UVXY buyers, I have found what I was looking for.

    http://www.tradingvolatility.net/

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  31. j

    The good and bad from a close friend who is a world class virologist.

    “the transmission is difficult (good) but incubation long (bad) and mortality high (bad”).

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  32. smartestone

    feels like it’s game over

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    • bruce keller

      As bloody as this AM is, the lows from yesterday still haven’t been taken out and bears are getting pretty obnoxious, so it’s about that time. Having said that, I don’t know WTF I am trying to fight the new trend. Could a maybe got NFLX puts instead of betting up a quick bounce.

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  33. doubleplus

    Aaaaaaand UVXY up 20% pm.

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  34. tradercaddy

    Good Morning Vietnam!!
    It’s a beautiful evening on this Jan. 30, 1968 here in Da Nang and all is calm.

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  35. nynyny

    SPY closed at 196.43. Now at 182.19 Gigantic FU to everyone that bought yesterday’s rally and played for a bounce.

    Europe is shit.

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  36. runawaytrain

    The game is falling apart… all the lemmings jump into the rally’s then all the smart money sells like no tomorrow.

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  37. zheeeem

    I’ve found enough ways to lose money without even needing the VIX.

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  38. traderconfessions
    traderconfessions

    I rather be late to any rebound then find myself in a hole. Just don’t understand the rush to jump into a pinball market. Here’s where the gamblers get fucked.

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