Kumowizard
Long

VIX - So tell me what's good risk-reward if you look at vol?

INDEX:VIX   CBOE Volatility Index
100 1 4
First of all, if you check it on weekly time frame, VIX             was lower than 11 only before 2007-2008.

But the question is pretty simple: Is it better to sell Vol             here, or to buy it? What do you think is a better risk reward?

Let me tell you something. When I trade it, I normally trade on front VIX             futures contract. Timing is very very difficult on this product, since the VIX             curve normally always have a contango, and the curve can be quite steep sometimes. That means if you fck up timing, and with no bearish SPX             corrections the spot implied Vol             (shown on this chart)drops + you also have the rolldown on your futures conract. That means as time passes by and contract expiry is getting closer, the futures price is converging to spot VIX             . But this month, when May futures expired, we saw something which very rarely happens. The June futures dropped wvery quickly, despite its maturity is still far (17/June to be precise). This means time is not that much against us now, while the price of the product is at a territory which I think doesn't need too much explanation, regarding the risk-reward of betting on short term volatility to increase.

I know, stocks can only go higher each and every day, they will never come back down again! Well, probably not today as it is end of month. But think as a fund manager. What would you do today if you'd like to buy some cheap protection?

Do you think what I think? Volatility is too low. Maybe it can stuck as low as it is. But it has somehow a bigger chance that it goes higher from here within next 18 days on back of any minor stock mkt correction.

Buy volatility! And you can still keep your bullish stock positions... if you feel like.
On which broker VIX could be traded?
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