http://alphasecurecapital.com/wp-content/uploads/2015/03/logo-e1426537613238.png 0 0 lbernut http://alphasecurecapital.com/wp-content/uploads/2015/03/logo-e1426537613238.png lbernut2016-02-01 09:13:442016-02-01 09:44:53My @Quora comment on an answer to What does it mean to short the volatility index?
My @Quora comment on an answer to What does it mean to short the volatility index? :
If You ask this question, it means one thing: You are an amateur and You are not worthy of trading it.
VIX is one of the hardest instruments to make money on. I know only one person who can make money out of VIX, my ex-boss. That is not because he is a spectacular investor (sorry dude). That is only because VIX is the ultimate mean reverting instrument. It is like Harry Potter’s philosopher’s stone. Only those who are pure mean reverters at heart can touch it. The rest, they may suffer from some reverse Midas curse, they touch it and they turn to sh!t…
I have watched the skew on it [silently swallowing my saliva] . It mean reverts by definition. This means You Long it when no-one wants it and You sell it when people panic. OK, easy so far. The problem is how do You size it and where do You stop it ?
My ex-boss showed me how he does it. He milks it well on his PA account. He has tripled his size, but it was funny to watch how scared he got when i asked him if he would like to do it as a job. He said no 8 times in a row, waving hands and getting all agitated (he had to be sedated with some Pinot Noir thereafter), and the guy tripled his account… I can’t do it and I am a professional short seller: Babylon on the markets like now, and I am ridin’ that bus (so much for slow humble start…) . But VIX you said, why don’t you go first ? I am too scared