While the
VIX is a volatile index by itself, containing derivatives that can be fun to trade individually; it can also be used as a valuable hedge against a range of portfolios. While I had a tech heavy portfolio the last month and a half, I took tremendous short term gains anywhere between 10 and 15%. While holding the
VXX ETF to mimic movements of the
VIX, I used this derivative to hedge against sharp downfalls in this NASDAQ.
Over the course of tech making a quick run, the ETF I held took losses of around 20%. This is why it is vital to take a holding relative to other positions - I usually do 1/3 position compared to fulls in my portfolio. This way the losses only really amounted to ~6.5% compared to a full position. Today on 6/19, a couple days after I liquidated all my tech positions [
FB,
AAPL,
SNAP,
MOMO,
CRM] (still holding
NVDA), the NASDAQ took a hit and the
VXX ETF is up 8.2% currently. This spike has erased losses to -10% for the position alone (~-3% to a full position) and has actually made me net green for the day even after suffering losses of 2.5% on $NVDA.
Even though the
VIX is extremely risky by itself, I do think it contains great value as a hedge if utilized correctly.
Over the course of tech making a quick run, the ETF I held took losses of around 20%. This is why it is vital to take a holding relative to other positions - I usually do 1/3 position compared to fulls in my portfolio. This way the losses only really amounted to ~6.5% compared to a full position. Today on 6/19, a couple days after I liquidated all my tech positions [
Even though the
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.