drip drip drip lower after any pop. wow, can't even hold its gain for one day. it's the same story every afternoon. almost too easy. if the dow gains back another 30 or 40 pts, vxx will go negative. I see your points wes, one should never be long this under any circumstance.
Options are often underpriced?!?!
I've never seen options that I felt were sold at a cheap price. Buying options regularly in case of a black swan is a total money loser. Buying more VXX with a % of your account balance regularly is a disastrous strategy too. How would you know when to sell? And after you sell you'll be unprotected for a while. How do you know the VIX won't spike from 80 to 300 after you sell your VXX? When VXX eventually crashes it'll lose you money faster than you can gain from long positions in your portfolio too...
You must be a reformed VXX-aholic trying to help others. Why else would you be hanging around here?
Options can provide a hedge against your position in the market and are often under-priced because they ignore the possibility of the highly unlikely event. I wouldn't bet the farm on VXX, but a small side bet makes a good hedge against uncertainty with the potential for a large payout in the face of a "black swan event".
If you said that buying homeowners' insurance is a losing bet because the rates are rigged and the insurance companies always make money, you'd be right, too.
Wes--Thanks. I'm glad someone took the time to read it, as it could actually be helpful. Even more interesting (to me) is some of the cognitive therapy or rational emotive therapy, both of which hold that most of our emotional problems (beyond what is genetic, chemical, etc) and bad decisions are the result of irrational beliefs, many of which are formed early on in childhood (e.g. I must have the love and approval of all significant others). Others are formed later as a result of life experiences. We all have irrational beliefs and they impact our investing decisions. Sometime it might be fun to compile a list of some we have. One of mine that it totally irrational but has motivated some bad decisions is (after losing money on a particular stock) "I have to get even with that stock", leading me to focus on how I can make money either long or short to make up for the earlier loss, rather than just moving on to another investment.
Sounds arrogant and I am not tryingt to be a smart A$$, but I have seen this drop almost 10% in the last hour of trade and go negative! Hehehe It is horrible.
I guarantee you will definitely make money long. Once or twice. When you lose it will erase all gains and then some. Pointless.
Better to sit tight, trade short around a core, do your best and benefit from how the product is designed irregardless of space, time, news or anything else.
I am cynical by nature of the markets but I so believe in this turkey. YOu should never believe in anything in money markets!
This allows you to break that rule with absolute certainty.
DO NOT USE MARGIN!! Know what this is.
Being long VXX is like buying a lottery ticket. The odds are stacked against you, and if you play repeatedly you will definitely lose to the house, yet many still buy that ticket because of the dream (emotional trading) which seems so real, especially the more one rehearses it mentally until convinced it will happen. One other factor that keeps people coming back also has a parallel in gambling. There are two main types of reinforcement schedules that have been studied in animal learning and have some application in humans--variable and fixed schedules. A fixed ratio schedule, for example, provided a pellet of food to the white rat after a certain number of lever presses. A variable ratio provides rewards unpredictably, sometimes after two lever presses and other times after 500 presses. The rat (and also humans) reinforced on a variable schedule develop behaviors that is much more resistant to extinction. Extinction is the behavioral learning term for a habit or behavior that has been learned through reinforcement, and then gradually disappears if it is no longer reinforced (Like when one stops paying attention to a toddler throwing tantrums). But much like the player of slots, the VXX (or any stock, ETF, etc) will irrationally keep pulling that lever UNLESS he/she engages logic to overpower the strong habit,which is very compelling at times.