Home > Stock Market Buys > B VXX @ 48.30

B VXX @ 48.30

I have bought VXX (the ETF that tracks the short-term VIX futures contracts) for two reasons.

First is a portfolio hedge against future volatility and a possible reversal in the stock market.  As we approach earnings season, volatility generally rises as companies report beating, making, or getting crushed by their quarters expectations.  Vix should perform better in this environment than it has recently.  Also, should the market wake up to reality, and if corporate earnings come in worse than expected, the second characteristic of VIX, its use as a fear index, should help.

Secondly, as the chart below shows, VXX, and the VIX by proxy, has been declining for a long time.  It was highly inflated during the credit crisis, and now has returned to relative normalcy during a time that is still non-normal.  I see downside support at 47.54, and decided to front-run that a little bit.
2009-10-08-VXX

Disclosure: Long VXX.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: