Basic logic here. I’ve always wondered why I never bought and held this. By this, I mean XIV, inverse VIX.
Only recently has volatility creeped up, causing this fine ETF to get cut in half. Alas the life of a volatility trader. Nevertheless, it has rallied off the lows, now about $30. Should the panic subside and things get back to normal again, I have no doubt that XIV will be back to new highs.
It has been a matter of Federal Reserve policy to remove uncertainty from the markets, literally, which is why the VIX has been mired in the doldrums for years. There are brief periods of excitement. But, the over-arching trend has been to grind volatility into the dirt and to have very orderly and methodical moves higher in the broader indices.
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I have been telling you that for years!
As long as we’re discussing silly purchases, you could just buy FAS instead. Better returns than XIV over most time frames with lower volatility.
One of the favorites ETN’s among WS folks to put their bonus in….
Coast isn’t clear yet to buy a curve steepener on the 2 front most VIX futures …. which is what XIV is.
My guess is less fed guidance and consistent elevated vol through Dec.
Keep it on your watch list for sure but you’re risking getting butt fkd if the recent rally is faded into the next contract roll period