VXX Buying Questions from NuBie, Experts advice please
With S&P near record high and VXX near record low. I am tempted to buy some VXX for Insurance, but I have never traded VXX before, and need some cool headed experts on some advice.
1. Is VXX stock like for options like, can I buy and hold forever until for example it went up and then sell it.
2. VXX has come down from 400 in 2009 to 20 in 2013, however, I can argue that if I buy VXX today with limited downside (go to zero maybe), but have a shot to 400 historic volatility with 20X return potential. Is this true and any validity in this logic.
No, it cannot hit 400, or 350, or 300, or 250, or 200, or 100, or 90, or 80, or 70, or 60, or 50, or 40, or 30, or 25. It maybe could hit 22.50 if you get an absolute desperate panic and the Dow drops 1000 but only if that happens in the next week.
you can buy it as insurance, but usually, insurance premium you pay will be gone
and, vxx will never rise to 400...
vxx will never go to 0, it will just go to below 10 and reverse split and then repeat the process