Volatility on the Rise?

Featuring Max Wolff

Max Wolff, chief economist at The Phoenix Group, makes the case for betting on rising volatility. He explains the catalysts and lays out his trade in this interview with Justine Underhill. Filmed on May 17, 2018.

Published on
21 May, 2018
Topic
Trading, Volatility
Duration
9 minutes
Asset class
Equities
Rating
34

Comments

  • sb

    siddharth b.

    22 5 2018 09:04

    2       0

    no. just no. the contango will kill us all...
    Also a post below mentioned backwardation, i'd wager that backward VIX curves is a buying opportunity alright, for the SPX and not the VIX ...

  • SH

    Syed H.

    22 5 2018 00:26

    1       0

    Buy a grand of $UVXY and wait for it to pop?? Nooooo thanks. Just short $TSLA and ride the Crude train to profitville.

  • AD

    Anthony D.

    21 5 2018 20:51

    0       0

    Max,
    With the decay, what is the "Safe" time frame for a VXZ position, a few days, a week or two?

  • NT

    Nicolas T.

    21 5 2018 20:08

    10       0

    Good luck winning money with that strategy. VIX today's at 13.3, August Future is at 15.3... That's already 2 points that you're losing only by waiting. November (6 months) is at 16.45 so you'd be risking 3.15 (16.45-13.3) to win 1.55 (18-16.45) : that's not the best risk/reward, even if the probability were in your favor…
    I'm not saying VIX/volatility will stay low, but you'll need to have an almost perfect timing to make money on this. One possibility would be to wait until the board is in backwardation again, so the term structure works in your favor… Anyway, I would love to hear more about volatility trades, but this is a simplistic trade idea and a lot of factor were left out.

  • SS

    Sam S.

    21 5 2018 16:27

    1       0

    Hey Max----any further discussion of the automotive sector? Rapid fire info on the VIX---thanks!

  • SB

    S. B.

    21 5 2018 12:17

    2       0

    I agree, but can't you just buy long-dated options, for example, SPY/SPX, to capture the volatility?

    • VP

      Vincent P.

      21 5 2018 12:59

      2       0

      Yes you can but they trade by appointment (thin and wide spreads), so you pay up to structure your position. This guy mentions getting in and outof these positions due to tracking errors or outright upside trends that kill you twice as much. He's right. On the other hand, you can try $5, $10, $20 put spreads and wait or even try pairing VXZ (long) with VXX (short) dollar neutral or ratio. Done 'em all. Personally, I prefer to drift to where the action is most opportunistic like FX vol, Russell, NASDAQ while establishing some kind of longer term S&P downside movement. Just my two cents.

    • MK

      Michael K.

      21 5 2018 19:09

      5       0

      I disagree Vincent - Longer dated SPY are extremely liquid and tight on the screens.

      This trade idea is very touchy freely, hard to disagree with anyone ever saying “if vol is below x it’s probably gonna go up one day and higher than y it’ll be lower one day.”

      This topic deserves a richer survey and volatility ends up confusing 99% of non professional market participants without deep self education.