I am counting on options expiry to help us out considering that most of the roll over has occurred that's why we have bled in addition to the lowered risk perception.
Bubbledude, I make my assertions on:
April May I have at $1.65 which would be around 9%
May June I have at $1.93 which would be around 9.7%
Obviously I am misguided by the looks of your numbers?
I just make an implicit differentiation between the cost of selling the front month and buying the end month. Is that not a remedial way of estimating contango?
Wes the problem with your previous statement is that this weeks contango is significantly less than what the contango will be next week, given a stabile VIX.
of course a move up or down is an independant price change which affects VXX!
Adding to my explanation I also believe this goes to $0! Absolutely.
However there are fleeting moments where you may want to take a position and I personally felt this may be one of those moments. I can hold the lottery ticket in anticipation of my thesis and POSSIBLY have exposure to some dysfunction in France and China for however remote the possibility is. I do not have to pay a large premium to be exposed to negative unknowable circumstances. That's all.
This is not an freaking investment for me. Just a long shot and the best time I have seen in 6 months to take the position.
I was hoping Europe's problems may be able to be quantified in May/June. We all know that the problems that became publicized 2 weeks ago are slow, dragging situations. ECB was not about to make press releases one day after the media grabbed a hold of the situation.
We did get a nice pop but now things have continued the way they are supposed to on this product.
I am of the opinion that May/June will be a period in time where policy changes and posturing will occur more frequently and I am looking for the contango to begin to decrease next week. If none of this occurs then believe me we are on a fast route to $0 with out question.
The contango is the same as of now and pretty steep. I just am of the opinion that that is going to change next week. If it does not my bet will be taken off. I have played this for 3 weeks in anticipation of this. That's all. Now I just have to wait and see...