VIX at the daily view.
As stated before, the VIX is just hovering between the mid-20s to low 30s. This is due to election volatility being integrated into the VIX. Basically, volatility is ready expected during election season. This backwardation tends to eat up the profits especially if you're long on UVXY or VIX futures.
It's why UVXY and VXX slid into the red today. Backwardation puts an outrageous premium on the VIX futures, but it doesn't drive the actual asset price up.
Basically, let's say you are buying a soda for $0.50. However, backwardation puts a premium of another $0.50. So you pay a dollar for the soda. You're paying extra for the right to own that soda.
That's why I am more focused on shorting the VIX and won't be longing it. New traders will keep longing the VIX when they see the spot VIX rising. However, it's the VX or VIX futures that matters more since VXX and UVXY both derive from it. With the VIX floating like that and going back down during a rally, shorting the VIX will be way easier in the short term.
In fact the premium is so high on the VIX futures that the regular short ETFs are virtually on par with UVXY. That defeats the purpose of going long on VIX.
VVIX is not closing above 110 which is traditional the volatility zone. It means, the VIX won't be swinging that much in the medium-term future. VIX trades basically profit off of unexpected volatility.
As stated before, the VIX is just hovering between the mid-20s to low 30s. This is due to election volatility being integrated into the VIX. Basically, volatility is ready expected during election season. This backwardation tends to eat up the profits especially if you're long on UVXY or VIX futures.
It's why UVXY and VXX slid into the red today. Backwardation puts an outrageous premium on the VIX futures, but it doesn't drive the actual asset price up.
Basically, let's say you are buying a soda for $0.50. However, backwardation puts a premium of another $0.50. So you pay a dollar for the soda. You're paying extra for the right to own that soda.
That's why I am more focused on shorting the VIX and won't be longing it. New traders will keep longing the VIX when they see the spot VIX rising. However, it's the VX or VIX futures that matters more since VXX and UVXY both derive from it. With the VIX floating like that and going back down during a rally, shorting the VIX will be way easier in the short term.
In fact the premium is so high on the VIX futures that the regular short ETFs are virtually on par with UVXY. That defeats the purpose of going long on VIX.
VVIX is not closing above 110 which is traditional the volatility zone. It means, the VIX won't be swinging that much in the medium-term future. VIX trades basically profit off of unexpected volatility.