Traders & Investors Club

Hello All

I would like to start a discussion on the virtues and pitfalls of going long the VIX index via either VIXS (London Stock Exchange) or VXX (New York Stock Exchange). I am interested in any experience anyone has had trading these ETFs.

The following article is a good reference:
http://seekingalpha.com/article/673291-the-search-for-antifragility-in-v...

The article indicates there is significant cost in holding these ETFs long. It shows that when the VIX index is below 20, the VXX roll cost is of the order of 11% per month. The value of the ETF thus decays month by month and does not seem suitable for a long-term holding. The graph in the article shows VXX versus VIX since 2009 and it appears that while the VIX index may have a ‘floor’ the ETFs do not.
I am in VIXS at 87 and was happy to hold through to the end of October, awaiting a decent S&P500 correction. The more I read about VIXS and VXX the more nervous I get. One of the lessons here is to not invest in anything you do not understand.
I do not believe going long these ETFs should be referred to as a “No-Brainer” trade.

Regards,
Steve Murphy