Buy VIX call options. I did that in March and made 35x on my investment.
This situation is a bit different now. In March the expected return on VIX options was very high (at least according to my calculations). Now the expected return is much lower but if you are looking for a fun high risk bet VIX calls are probably your best option. (pun intended)
It is a very risky bet, but if it works out the return is very high.
I was looking at the options chain for VIX, and I found the calls to be quite pricy. We’re talking about an at the money call till March selling at a 20% premium. Was the pricing in March similar?
Yeah they are not cheap, but I don’t think they are pricing in the risk of the new strain.
If you want outsized returns you need to take large risks. This means buying out of the money calls. Right now I think the best bet is the 40-50 range. Again this is very risky, be prepared to lose it all.
The options were much cheaper in March, as the markets did not see the storm coming, even though Italy was already a shit show.
This might be of some help understanding the instrument.
In general if you sell a call you’re saying you don’t expect the price of the asset to increase (to the strike or above). If you buy a put you are saying you expect the price to go down. Both of these are bets on “short” side in a sense.
The obvious difference is that selling the call costs you nothing up front but could expose you to a larger loss if the prices do spike up. Buying the put costs you the purchase price but after than you will not be exposed to any additional risks.
I think the claim by Zohar, “If you want outsized returns you need to take large risks.” is either wrong or poorly stated. Clearly one can make great returns -- 50%, 100% and more—buying puts and know exactly what you are risking which might be a relatively small monetary amount.
Buy VIX call options. I did that in March and made 35x on my investment.
This situation is a bit different now. In March the expected return on VIX options was very high (at least according to my calculations). Now the expected return is much lower but if you are looking for a fun high risk bet VIX calls are probably your best option. (pun intended)
It is a very risky bet, but if it works out the return is very high.
Since you can’t buy VIX directly, can you describe what exact thing you bought?
I bought call options on the VIX. For example see: https://finance.yahoo.com/quote/%5EVIX/options?date=1615939200
Thanks!
I was looking at the options chain for VIX, and I found the calls to be quite pricy. We’re talking about an at the money call till March selling at a 20% premium. Was the pricing in March similar?
Yeah they are not cheap, but I don’t think they are pricing in the risk of the new strain.
If you want outsized returns you need to take large risks. This means buying out of the money calls. Right now I think the best bet is the 40-50 range. Again this is very risky, be prepared to lose it all.
The options were much cheaper in March, as the markets did not see the storm coming, even though Italy was already a shit show.
Is there any way to short VIX?
You can short VIX futures.
Shorting VXX is a bit like shorting VIX, often better.
This might be of some help understanding the instrument.
In general if you sell a call you’re saying you don’t expect the price of the asset to increase (to the strike or above). If you buy a put you are saying you expect the price to go down. Both of these are bets on “short” side in a sense.
The obvious difference is that selling the call costs you nothing up front but could expose you to a larger loss if the prices do spike up. Buying the put costs you the purchase price but after than you will not be exposed to any additional risks.
I think the claim by Zohar, “If you want outsized returns you need to take large risks.” is either wrong or poorly stated. Clearly one can make great returns -- 50%, 100% and more—buying puts and know exactly what you are risking which might be a relatively small monetary amount.
And likely ElMonstro does not have the ability to sell naked calls so his only option is to buy puts.