This sounds ridiculous, but if you bought equal value amounts of both VIXM (vix mid term futures) and SVXY (x0.5 inverse vix), you would make money right now no matter what point you bought them at.

by adayofjoy

Simultaneously going long and short on VIX sounds like a guaranteed recipe for a loss via decay, yet miraculously the math works out if you picked the right ETFs for the job. SVXY and VIXM are vix ETFs that have comparatively lower leverage and volatility which give them some of the lowest amounts of decay relative to other vix ETFs.

Today May 8 SVXY: 35.35, VIXM: 37.64

If you bought $5000 of both last Monday May 4 when SVXY: 31.93, VIXM: 41.68, you would have ~156.59 shares of SVXY and ~119.96 shares of VIXM which would be worth $10054.29 today.

If you bought $5000 of both on the March 23rd bottom when SVXY: 30.25, VIXM: 39.74, you would have ~165.29 shares of SVXY and ~125.82 shares of VIXM which would be worth $10578.87 today.

READ  TSLA momentum trade-bought 1000 Nov call flys that pay off 9 to 1

If you bought $5000 of both on Feb 19 right before the crash when SVXY: 67.66, VIXM: 20.10, you would have ~73.89 shares of SVXY and ~248.75 shares of VIXM which would be worth $11974.96 today.

I do not know if this strategy will continue working, but so far it’s remained slowly but consistently profitable regardless of market conditions.

Edit: This strategy would have made money if you did it at any time after Feb 5, 2018. Before that, SVXY was at ~500 and plummeted to ~43. Perhaps the same thing could happen. Perhaps not.

 

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.