Hello traders,
There are several reason mentioned here against shorting VXX - phoenix wrote about operational difficulty of locating shares to short, and vendi offering his opinion on short volatility risk from the point of fundamentals.
I want to point you to two excellent blog posts on technical risks of short VXX strategy -
1 http://onlyvix.blogspot.com/2010/07/shor...pears.html
2 http://marketsci.wordpress.com/2011/02/2...th-of-vxx/
Both posts discuss risks from statistical perspective, something that probably should be your starting point. Shorting VXX and actively managing risk can be difficult for a retail investor. I don't really know anything about it, because I trade as a professional.
L'Étranger offered to use the inverse ETFs for short exposure to VXX. I don't know what's available in the Canadian markets, but in the US there are two funds that offer "short VXX" : XXV and IVO. XIV is a daily inverse of VXX. Also you may look into XVIX which is a long-short vol strategy on the term structure of VIX futures.
Know your risks before you trade, and good luck!
There are several reason mentioned here against shorting VXX - phoenix wrote about operational difficulty of locating shares to short, and vendi offering his opinion on short volatility risk from the point of fundamentals.
I want to point you to two excellent blog posts on technical risks of short VXX strategy -
1 http://onlyvix.blogspot.com/2010/07/shor...pears.html
2 http://marketsci.wordpress.com/2011/02/2...th-of-vxx/
Both posts discuss risks from statistical perspective, something that probably should be your starting point. Shorting VXX and actively managing risk can be difficult for a retail investor. I don't really know anything about it, because I trade as a professional.
L'Étranger offered to use the inverse ETFs for short exposure to VXX. I don't know what's available in the Canadian markets, but in the US there are two funds that offer "short VXX" : XXV and IVO. XIV is a daily inverse of VXX. Also you may look into XVIX which is a long-short vol strategy on the term structure of VIX futures.
Know your risks before you trade, and good luck!