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Vix Lite The Future of Trading


Disclamer: I hold XIV for long periods of time.

@TopplingGoliath I can appreciate your concern for holding long positions in XIV due to its ability to rocket up and down. I have not done extensive research into VIX Lite, but why do the short positions on other items not concern you more? I may be missing something here, but holding XIV long means your losses are capped at what you put into XIV. However, in a black swan event the short positions do not have a cap on loses. This is why you can hold XIV long in an IRA but many of the other moves would not be allowed in an IRA. Why are the short positions not more of a concern?


I was not stating anything about trading the instrument long or short. I was speaking to the termination clause written in the fund. XIV is the only inverse vix etf that has a termination clause stating that if the fund were to drop 80% that it would be terminated. You are correct that you only risk what you put into the fund… but if you were to experience a flash crash or an event where liquidity ceased to exist you risk losing your entire investment with the termination clause. This would not be the case with other inverse vix funds such as svxy/ziv.


To be fair, aren’t you screwed anyway if your account drops 80%?
Maybe Svxy would drop 100% which would mean it’s close to the end of times in either scenario.
I generally keep a basket of low correlated ETFs, with extremely high win percentages, that I trade at what I deem an opportune time(generally 5-20%) that have clearly defined exits.

Hope this helps.


Yes, they do have a termination clause on XIV, but I disagree that it makes them more risky than things like SVXY which can actually give negative NAV. XIV cannot go negative. The risk for a holder of XIV is the credit risk of Credit Suisse not being able to pay.


Regardless I think the point people need to remember is that volatility products are inherently risky and you should only make them a portion of you portfolio like @Thanos has suggested.


The XIV termination clause is mostly a PROTECTION for investors. If there were a one-day catastrophe in XIV and you weren’t hedged, you would probably lose slightly more than 80% of your investment. With other long instruments, you might actually end up owing more than your investment (these are Exchange Traded NOTES after all), or at least the fund can go to zero.

Just because the issuer didn’t bother to set up a termination system doesn’t mean that the fund won’t terminate if there is an 80-90% drop.

And as Charles points out, if you short VXX or UVXY, you can lose more than 100%–and this would have happened (perhaps not in a single day, but in a few weeks) fairly many times before.

For UVXY, shorting at the wrong time would have lost more than 100% in 2007, 2008, 2010, and 2011–and at least 97% (maybe more) in 2014 and 2015.

I didn’t compute the numbers for VXX, but I think you would have lost more than 100% in Oct 2008, and very close to 100% lost shorting VXX at the worst time in 2011. I didn’t check whether any of these moves would have been triggered in a single day (perhaps not).


Except, you know, when it’s 200% of your portfolio, like your first trades.


Wow, not even 2 months in and already subscribers. Thank you for signing up.

Who says you have to wait 12 months😊


Congratulations. Despite this, I still believe that this business is more like a marathon than a speed race. Regards!!


According to the grid right now, Vix Lite is up 2% in the last 30 days. It has been open 50 days, with a 7.1% max DD.

Good luck trading.


Unfortunately, it appears it is in the midst of a max drawdown currently according to the strategy page.


The good thing is that its not expensive! I hate those strategies that charge $400-$500 per month. Especially those that have little or no track record.


I suppose it could give someone comfort to only pay $39 to lose hundreds or thousands of dollars.


Well you would be crazy to risk that much on a single system! Why not scale down?


But yes…I do agree that capital preservation is more important. BUT if the strategy charges hundreds that does not help


I’m not defending VIX LITE though since I personally would not subscribe to any system unless I see a 6 month track record.


Vix Lite showing a HUGE DRAWDOWN today.


This applies to companies dude. Not strategies. Just because you are down doesn’t make your strategy better/cheaper.


First, it’s not a “HUGE DRAWDOWN.” At least not yet. I’m sure today was a tough day for many strategies, though it was hardly a collapse. Even given the claimed internal diversification of VIX LITE, one would expect that it would sometimes have a DD of 7%.

This DD does make his 30-day return minus 2%. Again, that’s not particularly bad either. Yet the strategy is only 50 days old, so it’s a reasonable concern.

Second, I wouldn’t have bothered to post this except that DogZebra is correct that losing money investing does not make a strategy a “VALUE PLAY.” That moniker applies to stocks whose earnings are now cheaper to buy. Losing money trading does not reduce the price of the strategy in a way that could make it a “VALUE PLAY.”

Nonetheless, I hope that VIX LITE recovers soon from its modest DD and thrives.


This is not a huge DD. All strategies experience major falls in a single day. This does not necessarily represent a negative aspect.