Directional trades using Collar

[candreouTrade]

@Kim, @SBatch - I know that we don't typically trade directional strategies in the SO portfolio, but we have had good success with the VXX Collar trade.

 

My question is would it be possible to trade this vxx collar style trade, as a directional strategy, on any trending directional underling? If not, what would be the main concerns?

 

I would like to try a couple of strategies on some momentum stocks, to see the effects.

 

[zxcv64]

I would be interested in this too. I believe this is already done in the SO fund, so am tagging @cwelsh

 

[SBatch]

We have an inherent advantage using VXX that does not exist in equity underlyings.  We know absent vol spikes, VXX will move lower.  There is no such arrangement with equities.  Personally, I am not a proponent of attempting to trade short term direction in equities, I have just never seen it done successfully with consistency.

[candreouTrade]

But are there many studies in the academic literature which shows that momentum strategies can be very successful with equites.

 

Also stocks like MSFT or AMZN have a good history of trending higher, and would probably be less likely to crash sharply than VIX. 

 

I do definatley see the benefits of VXX over stocks, but would like to try some small positions (maybe paper trade) on some trending stocks to add some diversity.

[urfiend]

On 18.5.2018 at 4:14 PM, SBatch said:

We have an inherent advantage using VXX that does not exist in equity underlyings.  We know absent vol spikes, VXX will move lower.  There is no such arrangement with equities.  Personally, I am not a proponent of attempting to trade short term direction in equities, I have just never seen it done successfully with consistency.

With vxx trading lower, when is there a point where we have to move on because not enough premium on the short put and gain on the long put is earned? Or would you just scale the trade up to do more of them?

Thank you for your advice

[SBatch]

6 hours ago, urfiend said:

With vxx trading lower, when is there a point where we have to move on because not enough premium on the short put and gain on the long put is earned? Or would you just scale the trade up to do more of them?

Thank you for your advice

We will scale up and then move on to UVXY after it’s next reverse split which should occur in the fall.

[urfiend]

On 20.5.2018 at 2:42 PM, SBatch said:

We will scale up and then move on to UVXY after it’s next reverse split which should occur in the fall.

The VXX is supposedly being replaced by the vxx.b. 

Does it make sense to move to the vxx.b now already or is there not enough volume?

What is the reason for the vxx to vxx.b change? Did they change the way vxx.b behaves like in the svxy?

thank you for clarifying 

[SBatch]

1 minute ago, urfiend said:

The VXX is supposedly being replaced by the vxx.b. 

Does it make sense to move to the vxx.b now already or is there not enough volume?

What is the reason for the vxx to vxx.b change? Did they change the way vxx.b behaves like in the svxy?

thank you for clarifying 

VXX is an ETN with a maturity date which is 1/30/19 hence the need for a new ETN.  There are no changes to its structure.  No need to move to it until the end of the year.