Trading volatility after the blow up

Trading and Markets
1

Would like to hear ideas and experiences about trading volatility going forward from here. For the past year or so I’ve been trading vol in my IRA account, and using one of my IRA accounts at IB to broker transmit to my vol strategy here.

For the past week, I’ve been in and out of VXX, but today I went to enter a buy for SVXY at the beginning of the session after the CPI print and market response was becoming clear… and IB refused it. Turns out not that IB refused SVXY specifically because it was a short vol fund, but rather because SVXY is run by a limited partnership and uses K-1 tax forms and IB doesn’t let you trade any funds from limited partnerships in IRA accounts. ZIV is NOT a straight up replacement for XIV in volatility trading, so… it looks like i can’t trade vol very well in my IB IRA account, and will need a new non-IRA account at IB for broker transmit.

Further, I went to Ally (TradeKing) where I have another IRA account and tried to buy SVXY there, but they silently stopped letting anyone (neither IRAs or regular accounts) trade SVXY (I didn’t ask about ZIV).

So… this puts a damper on running a vol strategy as a trader at C2, saying it’s tradable in an IRA, but not being able to tell investors which brokers will let them run a vol strategy. Can anyone offer their experiences (current only! after the blow up of XIV) with their brokers, and can we perhaps get a list of brokers that will still let investors trade SVXY and VXX in an IRA account, and (especially, but not absolutely necessary) allow AutoTrading with C2? Thanks.
-Paul
ps. I closed my Battle Axe Volatility strategy due to overfitted underperformance in 2017 just before the blow up, and opened my new MultiVol Plus strategy (https://collective2.com/details/116286862) on Monday Feb 5. Both systems were out of XIV, btw, due to the falling volatility risk premium leading up to that point. I would have been long SVXY today, but couldn’t transmit that trade and missed a nice day. Oh well. Hence this thread and request for help.

2

You can replace SVXY by VMIN and VXX by VMAX. My broker (fidelity) blocked SVXY but not VMIN. They are actually better ETF overall. They also give 9% in dividend twice a year.

5 Likes
3

Thanks, that’s a good start, it seems to be available at IB in my IRA account. Unfortunately low volume, but perhaps slippage isn’t too bad. Thanks for the tip.

4

The most important thing with ETF is the underlying liquidity not the volume of the ETF itself. I wouldn’t worry about that too much. Glad I could help.

2 Likes
5

Volume picking up rapidly for VMIN. No K1 tax treatment. Nice to have choices instead of just SVXY now.
http://www.etf.com/VMIN

6

LOL, picking up perhaps, but when a single order for a few thousand dollars’ worth of shares shows up as a significant share of the volume for a two-minute bar… it’s still pretty low. Agree, no K-1 is nice, I hate those things and would like to never see one again.

7

Thank you very much for this valuable information.