HBP S&P 500 VIX Short Term Future Bull+ (HVU-T)

Not his game. Doesn’t like the leverage volatility ETFs. Too much risk here. He prefers at reducing risk at a portfolio construction. Volatility definitely is expected to rise. We have been spoiled the last couple of years but with interest rates rising there is more volatility.

There is typically an inverse relationship between the S&P 500 and the VIX. However, it doesn’t have to work that way, as volatility can also work both ways. However, at this time of year, you tend not to find a lot of volatility. Volatility really picks up from July into October, and then it tends to fall off a little. There is nothing wrong using this, but it is a short-term product, and you are typically looking for the market to go down a little.

A single VIX is a very sharp knife to play with. It is worse on this leveraged VIX ETF. This ETF suffers from time erosion. He would not hold it or trade it.

VIX index. Individuals should not use these. They are not for long periods. You will lose 5-10% per month just based on the way the futures contracts are managed. You can’t hold these things long term.

Where you talk about a bear or bull ETF that is levered, they have no future. You are supposed to trade them on a day to day basis or possible a weekly basis. They are guaranteed to lose over the long term because of the way the gains are translated over night. These are a very short term tactic.

(Top Pick Apr 18/16, Down 31.22%) He is trying to hedge the entire portfolio. He is long this one. This will move in the inverse of his stocks. He thinks there is a good chance it will move to $18-20 during the summer.

As a hedging strategy to reduce market risk? He always avoids these super bull leveraged things and this one is 2X. There is a price reset every day, so this is a 1 day hedge. These things are not to be held for more than a week. They are “day trading” vehicles. Even if you are absolutely right, you can still lose.

Thinks volatility is going to abate probably tomorrow. These are very short term and are usually traded intraday. If you wanted to be aggressive, he would look at buying a Call on Wisdomtree International Hedged Equity Fund (HEDJ-N). Or you could Buy Calls on Bank of America (BAC-N).

Short? It plays double the VIX. This is not for the average investor. It is hard to short the stock because it is hard to borrow it. VIX has been lowest in history for months and months, but stay away from it anyway.

This is meant to give you twice the daily performance of the VIX Short-Term Futures. This is a “Mugs” game. If you are going to be really right on this, then there has to be a sharp increase in volatility of the market.

Tracks volatility in the market. Don’t hold for than a week because you are trading futures contracts. It is leveraged and so has to rebalance daily.

Not a suitable way to play this volatility. Sometimes the futures market is discounting 10-20% volatility in the month and you can lose that premium. Prefers SH-N or RWM-N and you can hold them 2 or 3 months.

This is complex but the shape of the volatility of the futures curve is very steep so the underlying volatility contracts that are owned by this ETF, have to keep being rolled over. There is a real issue on timing and if you don't get it right, these instruments are basically designed to go to zero over time. He doesn't like these instruments.