Condor Options VIX and More. VXX/VXZ Pairs Trade. Barclays has made it a priority to create exchange traded notes (ETN’s) that capture market “factors” that investors normally do not have access to. In “ Hedging Equity Risk with VIX Futures ” I discussed the idea of going long VIX futures as a supplement to a long stock portfolio in order to reduce maximum equity drawdowns. In the follow-up article, I expanded on this idea with the iPath S&P 500 VIX Short-Term Futures ETN(VXX) and the iPath S&P 500 VIX Mid-Term Futures ETN (VXZ) and how these two investment vehicles provide an easy way to bet on volatility and the VIX futures curve. In addition to being able to hedge your equity position directly with a long position in VXZ, I suggested that an interesting strategy would be to short the short-term note (VXX) while going long the mid-term note (VXZ).
By selling the front and going long the back of the VIX futures curve, you effectively take advantage of a steep futures curve. The question is always: “So what were the results?” Will the VXX Ever Outperform? Investing With Options. The $VXX has become the butt of many investment jokes for the first half of 2010.
It's continued price drop in the face of a collapse in volatility has caused many "investors" to average in on their position, and it seems that whenever we see a slight uptick in the $VIX, there's a huge hoopla by many who nailed it. The trend, however, looks grim for longs: So the question is?