First day trading today. The gist is, it's supposed to track spot VIX more closely than VXX.. and not a day too soon with the major contango lately degrading TVIX & UVXY. Some background, (the click bait headline kind of a bummer..) http://seekingalpha.com/article/3970726-holy-grail-vix-investing-finally Product page looks like its short XIV, long VIXY, holding some ETNs in addition to futures. Spread today looked to be about .10-.20 on low volume. 25 was the start price. This could be successful, if they really get higher beta than VXX. Worth watching. This thread for trading experiences, as I plan to start trading this if it tracks VIX better than VXX over the next few weeks or so.
I think he was trying to say it's not meant to track anything long term, it's only replicating the one day return. So in other words, VXX does not track VX long term only it's one day return.
Why did you stop trading the VX futures? Honestly man, these knock off products are like fake watches on Canal St in NY, they look nice, but they are not functional. If you don't like trading the VX futures for whatever reason and why I'm not sure because all these products are chasing that dog in one form or another, then the next best thing are the VIX options which you can absolutely replicate a VX futures position in with less leverage if that is your issue. All these ETFs are black boxes. You have no idea what you are getting. Trading is so damn hard as it is, why add this complete unknown to your set of challenges? Why not just trade blindfolded with one arm behind your back if you just want to make it harder.
They're not all black boxes but these two certainly are. They're "discretionary" and the bounds of what the the manager can do are pretty broad and therefore scary. You really have no idea how the things are going to respond to a given change in VIX futures and the response may change from day to day in response to identical events because the manager may have changed the makeup of the underlying.
What is nice about the VIX options is you can trade the 2nd order derivative of vol which you can't do on the ETF's. Well, actually I think there are some ETF's trying. I just have not heard one good reason yet from anyone on why the ETF's should be traded over the futures or the options. I'm always winning to listen...
I would tend to agree. I guess one reason is if you wanted to balanced exposure over time over several months that the ETFs give you. You could replicate but with a small portfolio you couldn't manage the daily roll as efficiently as the ETF can.
I think you can manage the roll much better in the futures. You can zero the roll out. The ETF you are paying the roll yield every month which is not a trivial cost. I would never hold these ETFs long term.