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Should sell TVIX?


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Should sell TVIX?

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  #1 (permalink)
Hartford, CT, USA
 
 
Posts: 18 since Oct 2019
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Bought at $17 a few days ago. Now SPY is up a lot. No chance to gain? Should sell with loss, or wait for some time?

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  #3 (permalink)
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
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Depends on your position size and margin situation. You should be able to hold it if the
position is less than 20% of your buying power. But be aware that it can and will move
250% against you, so you have to have a strong stomach if you want to hold.

Check my elite journal Lady Vol's Primer for experience with trading these things.

Incidentally, the vol specialist hedge fund traders eschew TVIX for their long vol trades.


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  #4 (permalink)
Hartford, CT, USA
 
 
Posts: 18 since Oct 2019
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Thanks. Certainly not for long position. But would one month be long? Just bought it a few days ago. Right now is October, and also with a lot of things happening in the world, the SPY has a lot of uncertainty.

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  #5 (permalink)
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
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Keep the position size to less than 20% of your portfolio, and peel off some as we get into the higher
vol zones.

Keep your eye on the term structure of VIX futures at

Vixcentral.com.

As long as the front end of the curve is flat or in backwardation like today, with negative contango,
then TVIX does not decay, so you can hold it. The minute it snaps back into contango, TVIX starts melting
again fast.

Read up on this at Six Figure Investing.

Know your product! TVIX is one of the most difficult and notorious products on the boards, so you absolutely
must roll up your sleeves and learn it.


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  #6 (permalink)
Hartford, CT, USA
 
 
Posts: 18 since Oct 2019
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Cool! But the vixcentral.com does not seem to have expected spot prices in the future. How do I tell if the curve is going contango or backwardation? Or do you only care about the first part, i.e. now (front end)? It does have the current price.

Also, the theory behind this is a bit confusing. If in near term (now), the futures are higher than the current price, which means it's in contango in near term, isn't it a good news that signifying TVIX will grow? Why is flat or backwardation good?

For example, does the attached mean the futures are all above the recent spot price?


Forgive me if these are simple mistakes. I am reading six figure website... just there are a lot of irrelevant things.

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  #7 (permalink)
Kyoto, Japan
 
Experience: Intermediate
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Ok, don't worry about the spot price, for your purposes.

Read the prospectus! TVIX is based on M1 to M2, not the spot price.

So the only thing that matters is whether contango is postive or not.

If you want more granular data, look at this page.

Trading Volatility: VIX Futures Data

Eat down through the docs on this site and Six Figures till you understand what all those metrics mean, particularly the ones relating to weighting.


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  #8 (permalink)
Market Wizard
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NewBird View Post
Bought at $17 a few days ago. Now SPY is up a lot. No chance to gain? Should sell with loss, or wait for some time?

What does your trading plan say to do?

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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  #9 (permalink)
Hartford, CT, USA
 
 
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No plan.

Is TVIX melting now? With good news on SPY, it seems no chance to come back up.

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  #10 (permalink)
Market Wizard
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NewBird View Post
No plan.

That's too bad.

Take it as a learning experience.

I guess your options are to lock in your loss before it gets bigger, wait and see if it comes back, hope and pray, or maybe someone will tell you what to do on an internet forum and then it will be their fault.

Good Luck!!

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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