Most Popular Posts: Tools And Resources To Help Simplify Trading Of VIX ETPs

For most people, the concepts of volatility-related ETFs and ETNs are difficult to grasp. If I just state what they are by saying that they track the daily change of values for the expected annual dispersion of the stock market at different at points in time between 1 and 7 months into the future, I don't get many looks of understanding. 

And it's not because people aren't smart. I've had conversations on the topic with people coming from highly intellectual backgrounds including doctors, lawyers, engineers, actuaries, CEOs, CFOs, even financial investment professionals. The most positive response I usually get is a subtle indication that they are still awake while I'm talking.

The fact is that these are complex products engineered by the issuing banks to produce specific results. One could even go so far to argue that some of the securities are designed to be confusing and/or to lose money. For example, VXX has lost 99% of its value since its launch on Jan 30, 2009. TVIX has lost 99.8% of its value since it was launched on 11/30/10. Both of these have undergone multiple reverse splits and TVIX has another 10:1 reverse split planned for Aug 30th.

However, not all VIX futures products decline in value. The securities XIV and SVXY provide the daily inverse of VXX, meaning that if VXX declines by 1% on a given day, the value of XIV and SXVY increase by 1%. 

What many people don't realize is that the performance of these securities are a direct result of how the products are structured. Rather than being a matter of supply and demand, as is the case with stocks, these funds are driven by the values of two or more VIX futures, which creates a bias either for or against their long term value. It would not be surprising to see VXX and TVIX lose another 99% of their value in the coming years should the issuing banks continue to issue reverse splits assuming the underlying structure remains biased against them. 

The whole key then is to identify where the biases exist and then get on the right side of the trade. Trading of these products can be highly profitable if done correctly.

This entire site was created to help people do just that. In addition to providing VIX Futures Data and Daily Forecasts, I have written many blog posts about how VIX ETPs work. Today I'd like to re-share what I think are the absolute must-reads for anyone interested in trading these securities. There's always room to improve so I will continue posts in the future, but in the meantime take a look through the articles below and feel free to reach out to me with any feedback or questions you may have.

• Why VXX is Such a Killer (Five-Months View of VIX Futures Data)
• Secrets of VXX: The Value of the Roll Yield
• The #1 Rule For Trading Volatility ETFs
• XIV: When A "Sure Thing" Goes Bad

TD Ameritrade Now Tracking VIX Futures

In a move to address the growing popularity of VIX Futures, TD Ameritrade yesterday added the ability to quote and trade VIX futures directly.

Here's a helpful guide to build your own list of VIX futures:

SYMBOL - CONTRACT EXPIRATION
/VXQ3 - Aug 2013 VIX Futures
/VXU3 - Sep 2013 VIX Futures
/VXV3 - Oct 2013 VIX Futures
/VXX3 - Nov 2013 VIX Futures
/VXZ3 - Dec 2013 VIX Futures
/VXF4 - Jan 2014 VIX Futures
/VXG4 - Feb 2014 VIX Futures
/VXH4 - Mar 2014 VIX Futures
/VXJ4 - Apr 2014 VIX Futures
/VXK4 - May 2014 VIX Futures (does not exist yet)
/VXM4 - Jun 2014 VIX Futures (does not exist yet)
/VXN4 - Jul 2014 VIX Futures (does not exist yet)

Details on trading VIX Futures contracts directly can be found on the CBOE website.

Daily Bias And Spike Risk Forecasts Now Available Via Email

Our Bias and Spike Risk Forecasts are now available via daily emails to subscribers. Rather than having to visit the website everyday to check these numbers you can have the forecasts automatically emailed to you to save you time and help reduce the chance that you miss a critical change in the bias or spike risk. 

The emails also contain closing prices for VIX, select VIX futures, and VIX ETFs.

If you'd like to receive these updates just let us know.