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 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 SPX corrections the spot implied Vol (shown on this chart)drops + you also have the rolldown on your conract. That means as time passes by and contract expiry is getting closer, the price is converging to spot VIX . But this month, when May expired, we saw something which very rarely happens. The June 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 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? 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 stock positions... if you feel like.