To The Moon

1. What is $Cboe Volatility Index(VIX)$ and why is it easy to make money trading VXX when the market is volatile?

$Barclays iPath Series B S&P 500 VIX Short-Term Futures(VXX)$ is a derivative of VIX. The underlying VXX indirectly trades VIX by holding VIX front-month contracts.

$Cboe Volatility Index(VIX)$ , also known as the market fear Index, is the first measure to quantify market volatility expectations by weighting the price of a series of S&P 500 options.

As we all know, volatility is the main factor affecting the price of options. The greater the volatility, the more expensive the price of options. Friends who have done financial statements should have deep experience. So the VXX tends to rise when the market drops sharply, and gradually fall back to the lows if the market expects stable future performance with low volatility.

2, bear market trading products: VXX

If it weren't for the bear market, I wouldn't think of trading VXX. Because bull markets hit bottom and bounce back quickly, it's easier to simply short put on strong stocks.

And bear market VXX can better anticipate when the market bottom

Why is it a bear market? Because the United States long bear long bear short, so the bull market in VXX is always in overcast.

3. Trading method of VXX

There are people who want to bet on a market crash, so stay long term, but that's not a good idea. And long - term short VXX is very easy to meet the market black swan directly burst warehouse.

The above two points indicate that the risk of VXX being a unilateral seller of options is also very high, so it can either directly buy call or put, or do option combination.

Weekend observation of the VXX trend found a bad thing: VXX daily K concussion up, volatility continued bullish.

In this case, it is not suitable for unilateral call or put as mentioned last week. The option price is expensive, and the back and forth fluctuation will destroy the value, so this week's strategy has been improved to spread strategy.

If you recently feel the market volatility risk increase, bullish VXX, can do calendar bull spread, concussion to make money when the rights, encounter a rise in a loss to earn both at the same time can be liquated:

• buy$VXX 20220414 26.0 CALL$
• short$VXX 20220311 30.0 CALL$

If you think the market is due for a pullback, you can do a calendar bear market spread strategy, covering both positions in the event of a slump

• buy$VXX 20220617 26.0 PUT$
• short$VXX 20220318 23.0 PUT$

I traded the first option because the market is really complicated right now, much like 2008, with war and financial crisis. Although I am bearish on VXX, the current trend tells me that it is really too early to buy PUT.