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How to Lose 40% in a Day

Want to learn how to lose 40% in a single trading day? Good. This post is for you. Losing 40% or more in a day was always possible using futures and options, but before June 2006 it was nearly impossible to do so using an exchange-traded fund (ETF). What happened in June 2006? The first […]

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Adaptation

In October 2015, Crude Oil was in the midst of an epic crash, down more than 50% from its high in 2014. At $49, credit concerns were front and center, as spreads on Energy High Yield bonds exceeded 1000 basis points. The pundit talking points at the time were as follows: With Crude Oil under […]

Volatility Spiked. Now What?

Well, that didn’t take long. 1) Is Shorting Volatility a Free Lunch? 2) What Happens When Volatility Rises? These were the titles of my last two posts. And today both questions were answered in extreme fashion. The Volatility Index (VIX) rose 46%, the 7th largest 1-day spike in history. The S&P 500 declined 1.8%, its […]

May you live in uninteresting times. Market volatility has become a thing of the past. To wit, the S&P 500 (over the past 15 trading days) is trading in its narrowest range in history. The VIX, the so-called “Fear Index,” is lower than 99% of historical readings. What are investors afraid of these days? You […]

Thinking about shorting volatility? You’re not alone. Short interest in the long volatility ETN (VXX) has exploded higher in recent months. Source: RBC, Zerohedge Why does everyone want to short vol? 1) Shorting volatility (ex: shorting the long volatility ETN VXX) has been enormously profitable since 2009… 2) This week the Volatility Index (VIX) hit its […]