Stop Fighting Volatility, Invest In It

CBOE VIX Futures Event
The lulls of summer appear to be over. After 50 days of no daily stock market moves bigger than 1%, stocks have been jolted the past three days – with triple digit losses/gains in the Dow and greater than 1% movement last Friday, Monday, and Tuesday. Meanwhile, the VIX sipked over 40% higher on the pickup in activity. {Disclaimer: Past performance is not necessarily indicative of future results}.

The cleverest meme we’ve seen so far on the market movement was a play on the old Sell in May market maxim, “Sell in September or get Dismembered.”

And it appears a lot of folks are worried about just that type of outcome – dismemberment – with a record 107 million shares traded yesterday in the long volatility ETF, $VXX.

 

Another impressive stat, seven percent of the NYSE Trade Volume has come from inverse and Volatility ETF’s, which was another all-time high.

There’s no doubt volatility, and protecting against it, is at the forefront of everyone’s minds, but the problem with these ETF and ETN is that they are more short term bets on volatility spiking, say, tomorrow – than long-term hedges against volatility for a diversified portfolio.  ETF.com describes the Long Volatility ETF $VXX as a short term, market timing option only, as it’s long term performance won’t do you any good.

“Volatility ETFs have a history of erasing vast sums of investor capital over holdings periods as short as a few months.”

So you have a lot of interest in protecting portfolios via VIX-based products, offset by the VIX being an imperfect tool for doing so. While some would see that as a structural problem, a small group of hedge fund managers are seeing it in a different light.  They’re seeing the VIX not just as an index to gauge how worried you should be about your portfolio, but instead something of a new asset class where skilled traders can try and capture the structural imbalance between insurance buyers and the odds of a “claim” if you will.

They see structural alpha in these markets – where investors are overpaying for protection, and someone needs to sell it to them. Enter a handful of hedge fund managers who are doing just that, managing millions for investors via VIX futures and options market. How do they do it?  Now’s your chance to meet them.

Join us on Thursday, October 13th, at the CBOE headquarters to hear from these managers, as well as CBOE Director of Education, Russell Rhoads the current environment surrounding the VIX.

vix-cboe-rcm-alternatives-event

(Disclaimer: Past performance is not necessarily indicative of future results)
Performance numbers provided by manager

Click here to register! We look forward to seeing you there!

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

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