As part of my recent push to refine the M2 XIV/VXX trading model I have been looking at technical tools that might be useful.
The following are last Monday's updates for the VIX index and the VIX ETN proxy VXX.
Tomorrow we'll post tonight's update for comparison to check alignment and trend. We'll also be integrating the VDX signals into the M2 platform as a confirming signal.
The focus on this week's posts will be volatility while I work in the background on some M3 site housekeeping and infrastructure upgrades.
Keep in mind that VIX is the volatility index based on S&P put contracts and can only be traded as options or futures.
VXX is an ETN (exchange traded note) that looks like an ETF but is based on VIX futures. It trades like a stock on huge daily volume (50 million) and has a wide robust option chain that trades narrow spreads with high liquidity. It also trades after hours. Since VXX is based on VIX futures contracts it has an intrinsic decay function that must be respected. VXX should never be considered as a long term buy and hold product unless the position is short.IMHO.
