ETF to hedge against portfolio risk: VXX - Mitch Tuchman

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ETF to hedge against portfolio risk: VXX
Jul 30, 2009 09:20 PM UTC

Mitch Tuchman

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Via BloggingStocks:

All of a sudden, investors don't seem to have a care in the world. The market is going up and up, and complacency has set in. One way investors measure this complacency is through an index called the "VIX." VIX measures the implied volatility of a basket of options on the S&P 500 index. The more investors are willing to pay for puts and calls, the more there is an implication that they are "nervous."

If you are a contrarian investor, the way you read the VIX is: 1) if you buy stocks now you are moving with the momentum of the market; and 2) the market could get really "choppy" soon, and 3) if you wait patiently to buy stocks after fear has returned to the market, you will likely enjoy a substantial gain when volatility returns to the market.

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ETF to hedge against portfolio risk: VXX originally appeared on BloggingStocks on Thu, 30 Jul 2009 16:20:00 EST. Please see our terms for use of feeds.

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